On July 3rd, The New York Times (formerly known as the newspaper of record) reported that health insurance companies around the nation are asking for rate increases of 20 percent to 40 percent or more. What is that about? It’s about human nature and economics. Healthy people have not signed up for ObamaCare, sick people have.

The New York Times reports:

Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

The Oregon insurance commissioner, Laura N. Cali, has just approved 2016 rate increases for companies that cover more than 220,000 people. Moda Health Plan, which has the largest enrollment in the state, received a 25 percent increase, and the second-largest plan, LifeWise, received a 33 percent increase.

This has to do with something called an actuary table. Actuary tables are generally used to determine life insurance premiums. They determine expected life spans based on information including health habits, family health history, and other variables. They then establish an insurance rate that will provide life insurance and still make a profit for the company. It is important to remember that companies are in business to make a  profit. Similar charts are used in health insurance to make sure that both healthy and sick people will have the insurance they want. The problem with ObamaCare is that young, healhty people are paying higher rates to cover the cost of older, less healthy people.

The article further explains:

In their submissions to federal and state regulators, insurers cite several reasons for big rate increases. These include the needs of consumers, some of whom were previously uninsured; the high cost of specialty drugs; and a policy adopted by the Obama administration in late 2013 that allowed some people to keep insurance that did not meet new federal standards.

“Healthier people chose to keep their plans,” said Amy L. Bowen, a spokeswoman for the Geisinger Health Plan in Pennsylvania, and people buying insurance on the exchange were therefore sicker than expected. Geisinger, often praised as a national model of coordinated care, has requested an increase of 40 percent in rates for its health maintenance organization.

Insurers with decades of experience and brand-new plans underestimated claims costs.

What ObamaCare has done is to disrupt health insurance for 80 percent of Americans who were happy with their health insurance in order to insure the other 20 percent. What has actually happened is that the 80 percent have been disrupted and the 20 percent have not signed up. It really would be a good idea to simply scrap ObamaCare and replace it with something that was free market based. I am sure something could be worked out to help low-income Americans afford the insurance they need.