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The Affordable Care Act will make insurance less affordable

With full implementation of the Affordable Care Act (ACA) less than two months away, Marylanders may expect their health insurance to become more affordable. It's right there in the title of the law, after all. However, if you plan on buying an individual insurance plan through Maryland's state exchange, you will probably be paying more for insurance, thanks to the ACA.

Affordable insurance was a key selling point of health care reform. When he signed the bill into law, President Barack Obama claimed, "This legislation will also lower costs for families," and state-run health insurance exchanges would be a primary vehicle to help consumers realize these lower costs. The exchanges would be online marketplaces, where consumers would have better choices and lower prices.

That was the theory. Now we are seeing what's happening in reality. Maryland is getting ready to roll out its health insurance exchange so individuals who do not receive health insurance through their work can buy a policy there. State regulators recently released the premium prices they approved for insurance companies looking to sell their products in the exchange. They aren't good news for consumers.

Today, a 25-year-old man on the Eastern Shore who goes to esurance.com can purchase an Aetna insurance plan for $75 a month. Under the rates approved by the Maryland Insurance Commission, Aetna's cheapest plan in the exchange is $203. That's a 171 percent increase, and it wasn't even enough for Aetna to provide what the ACA requires; the company has decided to pull out of Maryland's insurance exchange. The price differences for other plans are similar.

To be fair, the lowest-cost plans for sale today are not the same as the lowest-cost plans that will be sold in the exchange. The exchange plans will be much more comprehensive. Many of the cheapest health insurance plans available for sale in the individual market today have high deductibles and may not cover as many situations as do the other plans. But that's not a bad thing — it gives Marylanders choices in prices and in how much risk they're willing to carry themselves or put on the insurer. For most Marylanders, the cheaper plans are excellent choices, but for some Marylanders they're not.

Currently, you can also buy both the cheap plans and the comprehensive plans in the individual market. But you won't have the choice to buy high-deductible, low-cost plans in the exchange. You have to buy a plan that is designed by bureaucrats and politicians in Washington and Annapolis.

Some may claim that a high-deductible policy is like having no health insurance at all. That paternalistic view ignores both individual choice and the trade-offs that come with purchasing any product. Many people cannot afford to buy high-end health insurance. Their choice is between buying a low-cost, high-deductible policy and going without insurance. Others — especially healthy, young adults, who typically have lower incomes and little wealth — don't see a lot of value in having comprehensive health insurance. They may decide that having a policy covering them against big losses is all they need. Whatever their reason, those who want these policies should be free to buy them.

For some Marylanders with low incomes, the high cost of insurance in the exchange will be partially offset with federal subsidies. These subsidies don't lower the cost of insurance, however. Instead, they merely reduce the cost of insurance to those who are buying it, transferring that cost to taxpayers. It's a cost shift, not a cost reduction. Given the federal government's large deficit, these subsidies are another burden that future taxpayers will be forced to deal with.

Besides more affordable insurance, the ACA's backers once claimed that the law would "bend the cost curve down" when it came to health care spending. But increasing the cost of insurance, and then shifting the burden of paying for it to taxpayers, is doing nothing to control overall health care spending. In fact, it is only making the problem worse.

The large premium increases that Marylanders will experience when they enter the state insurance exchange are only the beginning of the painful consequences of health care "reform." As more of the law is enacted, we will see other problems for consumers and health care providers. If Congress is unable to repeal the legislation, it should at least rename it. There's nothing affordable about this flawed law.

Marc Kilmer is a senior fellow at the Maryland Public Policy Institute. He can be contacted at mkilmer@mdpolicy.org.

Copyright © 2015, The Baltimore Sun
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