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Obamacare Could Be Worth More Than $90 Billion to the Insurance Industry

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The Affordable Care Act will push the over 45 million uninsured in the United States to find health care coverage. The largest portion of this group will find coverage through the health insurance marketplaces set up by the state and federal exchanges. Consumers purchasing through the exchanges will receive coverage through private insurance companies, with many receiving federal tax credits to help pay for policies. While the consumer may not be paying the full price of the policy, the insurance companies will still receive the full premium. With millions mandated to receive coverage, how much are the currently uninsured worth to the health insurance industry?

To answer this question we looked at what the uninsured would pay in monthly premiums for coverage with private insurers. (See our methodology below) Based on our estimates the uninsured are worth a potential $92+ billion in annual premiums to the insurance companies. The Affordable Care Act requires that 80% of the value of the premiums be used to service health care costs, leaving a little over $18.4 billion to be spread across employees, marketing, overhead and profits. Insurance companies we've looked at could expect anywhere from 2-4% of all premiums to come in the form of profits. This would amount to $1.8-$3.6 billion dollars annually.

Total Uninsured (2011) 45 million
Uninsured Over 138% FPL 26.3 milion
Total Annual Premiums $92 billion 
Profit Margin (2-4%) $1.8-3.6 billion

It will take a number of years for all of the uninsured to get coverage, with the CBO estimating that it may not occur until 2015. Accounting for annual increases in insurance premiums the annual total would easily exceed $100 billion by then.

Our Methodology

To estimate the potential value of the uninsured we needed to determine how many were uninsured and what their premiums would be for insurance. While the consumer may be paying only a fraction of the actual premiums due to tax credits, the insurance companies would still receive the full value of the premiums. 

Prices for plans vary dramatically between states and even between counties within states. In order to account for this we approached our analysis at a county by county level.

For the cost of plans, we used the premium for the second lowest cost silver plan (SLCSP) available in each county. We chose this plan for the following reasons:

  • The SLCSP is the plan used in the determination of the available subsidies. The cap on what your family spends on health insurance is applied to this plan with any excess paid in the form of tax credits.
  • For those with incomes of less than 250% of FPL only silver plans are adjusted to have improved cost sharing, making silver plans a better deal for those that qualify. 

Using data from the 2011 census, that underlies our county-by-county map we could get an idea of how many people were uninsured. For the our calculations we only included people who had household incomes over 138% of the Federal Poverty Level. Those with incomes below that line do not qualify for subsidies and were much less likely to be able to afford on-exchange private insurance. 

The number of uninsured in each county was then broken down by age and a total potential premium was calculated using an age adjusted price for the SLSCP. The resulting total value of each county can be found in our map.

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Read/Post Comments (32) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 08, 2014, at 1:39 PM, timraiders wrote:

    Could be? Yes it could also force insurance companies to cover the higher risk people and not getting the younger low risk to sign up like the Obama administration said they would which would run private insurance companies out of business. If you read the ACA it allows for bailing out insurance companies if this doesn't work. Welcome to the beginnings of socialism.

  • Report this Comment On January 08, 2014, at 1:48 PM, christian1269 wrote:

    Obama took advantage of Americans, to increase profits of insurance companies, all the while pretending he was doing the opposite. Rates are going up, to help increase profits of those insurance companies that contributed to Democrats. Who doesn't want a captive customer who has to buy your product?

  • Report this Comment On January 08, 2014, at 2:19 PM, dth wrote:

    It's not true, insurance premiums are based on risk, and the risk the insurance companies will cover from the risk pool ( the people ) . ACA has changed the risk making health insurance companies accept everyone and all risk. The payout from the insurance companies to cover the new risk or claims, will be astronomical. If insurance companies do not gain policies from younger healthier people, then ACA will fail, meaning insurance companies will not accept ACA or they will fail themselves. Increase in premiums that will happen in 2014 will only cover changes on policies making policies comply with new ACA guidelines. These new premium cost don't begin to cover all the new risk, or un healthy people that will enter the risk pool, along with continued health care cost increase which health insurance companies do not control. It's not a win for health insurance companies at all.

  • Report this Comment On January 08, 2014, at 2:28 PM, MaxxTheKatt wrote:

    Folks! Brighten up a little here okay! Show some smarts. Don't be like the mindless liberals. The ACA was intended from the original concept to FAIL! It was designed from the very beginnings to be the gateway to the "Single Payer System" otherwise known as "The Socialist Controlled Healthcare System."

  • Report this Comment On January 08, 2014, at 2:29 PM, Freddyfreebe1 wrote:

    Health Insurance needs to be abolished , Universal Healthcare was always the only real answer. You still have the greedy and stupid paying twice would they should rather then doing the research.

  • Report this Comment On January 08, 2014, at 2:31 PM, RFTECH3000 wrote:

    this is based on asumptions and also leaves out some very important considerations :

    Asumption # 1 is that all of the 45M uninsured will

    purchase insurance , this however is FALSE since surveys already indicate that about 30% of the uninsured do not intent to buy insurance at all and rather take the fine !

    Then you have the 26M not qualified for subsidies, for them the premiums will be the determing factor , if premiums are too high a lot of them will take the fine as well !

    Asumption#2: is that the uninsured who actually

    sign up will pay in more than what they take out , but once again that is more in the realm of wishful thinking ! many of the uninsured are that way because they have some kind of pre existing conditions which kept them from getting insured , once they sign up for insurance they will - of course - use their new coverage and if there are not enough young and healthy people in the pool than the profit margins of the insurance companies will shrink !

    Asumption#3 is that all the people who currently have insurance will stay insured , yet again this is in the realm of wishful thinking , there are many people like me who saw their premiums double or even triple and as a result decided to take the fine instead !

  • Report this Comment On January 08, 2014, at 2:32 PM, Scottilla wrote:

    Hard to believe that after all this time, there are still so many people opposed to Medicare.

  • Report this Comment On January 08, 2014, at 2:46 PM, Lovesmusic wrote:

    So how much of this proposed $90 Billion will be paid from our taxpayers hard earned dollars? What happens when enrollees miss or stop paying premiums? With such high deductibles and co-pays, many with this coverage will not have the $$ left for paying premiums so will drop it. Still waiting for that all mighty number (?) of young and healthy people enrolled and actually paying premiums rather than paying for their cell phone and other comforts. Any time now, right??

  • Report this Comment On January 08, 2014, at 2:47 PM, SkepikI wrote:

    <Using data from the 2011 census,>

    compared to the other flaws people have pointed out above, this one is a nit, but you really need to delve deeper into HOW exactly the data was collected to determine if this has any validity at all. Some census data are if not bullet proof, at least proven adequately reliable over time...such as number of people counted (though you could say its not as accurate as one might suppose)

    Others like "income" are not worth a hoot. Ive never looked specificly at this data, but my instincts tell me a large number of people might be inclined to think this is none of the census business and fib just on general principles...not saying I MYSELF would ever mislead my overly snoopy government masters, but who knows what anyone else might do ;-)

  • Report this Comment On January 08, 2014, at 2:47 PM, CTRiffe14 wrote:

    Suckers! Who would ever believe anything from this guy? The presidency was never meant to be an EEOC we are with great history point and most racist situation since abolition. Against anyone disagreeing with this Congress

    Good luck on your next doc visit!

  • Report this Comment On January 08, 2014, at 2:50 PM, SkepikI wrote:

    Oh, and just to add some validity to my suspicions, I was one of the subset who got the full up overly intrusive survey from the Senseless ;-) Take a wild guess at my answer to "race"......

  • Report this Comment On January 08, 2014, at 2:52 PM, dth wrote:

    I would have had Medicare fixed, adding children, and truly everyone over 62 getting SSC or not. I think the main problems with Medicare are high cost of health care, and fraud. Those issues could have been fixed and still need to be. Clinton passed the Welfare Reform which caused millions of people to be dropped from any kind of health care including Medicaid. Hence the problems now with so many low income not having health care.

  • Report this Comment On January 08, 2014, at 3:06 PM, bamissfa wrote:

    obama has allowed over 12 million illegal aliens BREAK our US immigration laws.

    Obama wants to give them our tax funds and grant them the right to live here and take our jobs ALL THE WHILE obama FORCES US citizens to buy his stinkin lies called obamacare or ACA.

    What's wrong with that picture?

    he is an evil man a fraud and aphoney.


  • Report this Comment On January 08, 2014, at 3:34 PM, slanciano wrote:

    Poor hopeless souls that have no other choices but Obozocare.

  • Report this Comment On January 08, 2014, at 3:36 PM, JePonce wrote:

    And once Obamacare eliminates the insurance industry as planned and replaces it with a government owned and operated single payer system all of that private sector capital will be in the coffers of the Politburo.

  • Report this Comment On January 08, 2014, at 3:41 PM, govlies2 wrote:

    Its has always been about the money ! not the people of this country. If they wanted ins. for everyone then make a plan for people that do not have it and leave the hard working people paying their own way alone. But Obama and his tea party could not do that there was not enough money to be made to pass around under the table. Him and his tea party should be put in jail for what he is doing to this country and its people ! its really sad the greed and power is going to turn the usa into a third world country. Our Gov is out of contol with power they can do what ever and get away with it. just like bengazi obama and hillary and everyone involved should be put in prison for murder for that.

  • Report this Comment On January 08, 2014, at 3:41 PM, Dadw5boys wrote:

    Insurance Companies stopped taking out the Tonsils of the Poor and now you have 1000's of kids with breathing problems and sleep problems. Return to removing ALL Tonsils and save tons of money on Medical Care for kids and young adults.3

  • Report this Comment On January 08, 2014, at 3:45 PM, PJSolarz wrote:

    -If you like your health insurance plan, you can keep it, Period!

    -If you like your doctor, you can keep him, Period!

    -Obamacare will cost less than your monthly cell phone bill

    -This health care package will pay for itself

    -The health care bill will not raise the deficit by one dime

    -We should not mandate the purchase of health care

    -This law will save the average family $2,500 a year

    -Planned Parenthood provides mammograms

    -Under our plan, no federal dollars will be used to fund abortions

    -ObamaCare fee is not a new tax

    -Annual checkups, screenings, and vaccines are now free (once your deductible is met)

    -Over the last two years, health care premiums have gone up — it’s true — but they’ve gone up slower than any time in the last 50 years

    -All health care deliberations will be covered on CSPAN

    -I happen to be a proponent of a single payer universal health care plan

    -Doctors choose amputation because they get better compensation

    -Greedy Doctors taking out tonsils for more money

    -Illegal immigrants will not be eligible for Obamacare

  • Report this Comment On January 08, 2014, at 4:05 PM, CD74 wrote:

    How do they go about and collect the fines of people who are not working or stop paying their bill and others who get laid off.

  • Report this Comment On January 08, 2014, at 4:23 PM, dth wrote:

    It's an IRS fine. The third year fine will get most people on the ACA plan ( it's increasing each year ) either Marketplace, Medicaid, or private.

  • Report this Comment On January 08, 2014, at 4:42 PM, Barry1Soetoro wrote:

    The 45 million uninsured are an URBAN MYTH!!! They are a giant squid, bigfoot, yeti, whatever. Everyone has heard of them, but no one can find them.

    The democrats, and apologists blame republicans, even though not a single republican voted for obama-does-not-care. The Un-Affordable-Care-Act is a monster that just won't die.

    SOME of the previously uninsured ACTUALLY wanted insurance. For these people, the ACA works. BRAVO. But for the majority or the previously uninsured, and the majority of the previously insured, it is a train wreck, bringing higher costs, more regulations, more confusion, and no, you cannot keep your doctor, or your plan.

    And yes, obama DID know about it when he lied about it on campaign stops. And yes, obama DID know he was lying when campaigning against Mitt Romney for the 2012 election.

    My Argument:

    WHY will the ACA fail? Why do illegal drugs flourish? Think about it.

    1. In France several years ago, the old guard was panicking because young French people were embracing everything English. LE SANDWICH, LE HAMBURGER. They were worried that the French language would die out. So they made rules to protect their language.

    2. Illegal drugs. Do drug dealers advertise? They don't need to! Illegal drugs are SO GOOD that people who want them will find them. NO ADVERTISING NEEDED.

    3. obamacare, and other products people don't want. These rely on advertising. But in the case of obamacare, even advertising cant save this monster. why?

    -Young people are mostly healthy. They don't need/want health insurance. And they certainly don't want to pay for it.

    -People who had health insurance, but had their policies cancelled. They will tell their friends and neighbors how bad obamacare is.

    They lost their doctor.

    They lost their plan.

    Their monthly costs went up.

    Their deductible went up.

    They are now covered for things they don't want/need.

    They are paying more, for the same coverage, than their lazy brother in law.

    obama wanted to divide America - he found the way to do it. No good can come from obamacare. The only way America can move forward is to unite behind opposition to obamacare.

    Let's impeach obama, put Joe in his place, restore the previous (non-broken) health care system, and get America working already.

  • Report this Comment On January 08, 2014, at 8:09 PM, GymS wrote:

    CAN YOU SAY Chicago bullystyle kickbacks?

  • Report this Comment On January 08, 2014, at 11:06 PM, Mwilson63 wrote:

    Who are these people who think the uninsured are a myth? Honestly these people are all mentally ill. We are a Nation of over 300 million people and about 45 million Americans don't have insurance. The people of this Nation have told our Presidents, Senators, Congressmen and Governors we wanted something done about Health care in this Nation because cost were rising and benefits were decreasing for decades. Obama told the government to send him a bill he could sign. The government put together a bill using input from both parties and he signed it into law. Health experts from all over the Nation gave input. President Obama has been personally held responsible for everything wrong in this Nation since his election. The truth is he has always been a good man trying to run an awful country. This Nation has turned the office of the Presidency into a good ole fashion scapegoat. Republicans in office share as much blame for the problems facing America as the Democrats. If you don't like Obamacare look at your own Republican party. The Republican party wants to replace Obamacare with something else but haven't produced a plan. Obama has been in office six years and healthcare has been on the table for more then twenty years and Republicans still have no plan. If they have a alternative they don't need Harry Reid to bring it up all they need is to say it on FOX, but they don't have a better plan. I have no doubt that if the Republicans could cancel Obamacare their plan would be very similar. Because the alternative would be to regulate the health insurance industry directly and no one in the government will suggest it. And all the Obama haters will love the new plan because Republicans produced it even though it would be a similar plan.

  • Report this Comment On January 08, 2014, at 11:12 PM, Mwilson63 wrote:

    And to all those people wanting to impeach Obama I want to make a suggestion or a statement. When we won our independence from England we forced English loyalist to be exiled from the new Nation. Perhaps it is time we exiled these traitors for attempting to overthrow our government. For all those wanting to impeach Obama you should be exiled.

  • Report this Comment On January 08, 2014, at 11:42 PM, glenns45 wrote:

    Obamacare is a cancer on society, it is not the cure but the Disease.

  • Report this Comment On January 09, 2014, at 3:36 AM, Barry1Soetoro wrote:

    Mwilson63 - Hitler made Germans swear allegiance to HIM, not Germany. Is that what you are proposing? Dislike of obama makes me a traitor? That is a big fascist step!

    The Republicans were NOT consulted in the writing of the ACA. You need to pay more attention! Remember Nancy Pelosi's famous quote: "We need to pass the bill to find out what's in it".

    A SMALL GROUP wrote the bill. IT WAS/IS a BAD bill. ALL Republicans and most Democrats WERE NOT CONSULTED.

    ALL DEMOCRATS went along, and voted for it. All Republicans voted against it.

    THIS IS HISTORY. Look it up. Do your research. But stop lying - like obama. Don't be lazy.

    Now, as to health care reform - there was a need. 45 million Americans were uninsured. Some of those 45 million had pre-existing conditions. Some were low income, and just could not afford insurance. Let me break it down for you, as you have trouble with facts:

    a. pre-existing conditions: say 5 million Americans have pre-existing conditions, and insurance companies would not (previously) cover them. Under the ACA, they get coverage. this is a good thing.

    b. the other 40 million. They still can't afford or just don't want to pay for health insurance. They are young, generally healthy, and tend to have minimal medical needs.

    The Democrat solution was to throw the system on its head, and make the 85% pay for the 15%. As I don't speak for the Republicans, I don't know what their 'solution' would be, or even if they have one, but if the cure is worse than the disease, maybe the disease wasn't so bad...

    And no, a Republican fix to health care would look NOTHING like the current wealth redistribution plan (obama-does-not-care, aka the UN-AffordableCareAct).

    As to your 'exile the traitors' comment: I pity you. You probably believe that.

    I wanted Nixon impeached.

    I wanted Clinton Impeached.

    I wanted Bush 2 impeached.

    And yes, I want our current dictator impeached.

    The thing they have in common, which you will never understand? it starts with principle...

  • Report this Comment On January 09, 2014, at 9:29 AM, DevonShire123 wrote:

    So what you're saying is, the government is helping corporations steal $90 million from the People by illegally forcing them to buy something they don't want and that will likely kill them (through LACK of actual medical care).

  • Report this Comment On January 09, 2014, at 9:32 AM, maxbrn1 wrote:

    Yes, and cost over 1.3 trillion dollars to we the taxpayers!

  • Report this Comment On January 09, 2014, at 11:59 AM, time4revolution wrote:

    Say NO to the upcoming massive insurance company bailout. Because of their greed and lack of integrity these companies got into bed with the devil. They alone should have to deal with the consequences, not the American taxpayers. Republicans should attach a No Bailout Bill to the debt ceiling. Dare the president to stand and say "I'm willing to let the country default in order to preserve a huge bailout for insurance companies." No bailout, no Obamacare. It would take away all incentive for insurance companies to cooperate with their new master.

  • Report this Comment On January 09, 2014, at 1:51 PM, SLTom992 wrote:

    It is long past the time that the government learned what it means to fear the people. They truly believe that they are smarter and more able to govern this nation than anyone else. Look at Obama and Reid standing before audiences and lying their heads off as if this nation is composed of nothing but sheep.

    I propose that we vote for NO ONE but conservatives the next mid-term election and taking control of Congress we begin taking these liars and criminals before the courts and jailing them as they should have been long ago.

    Obama came into office worth $800,000. Exactly how is he worth over $9 Million now? This implies that somehow he has earned over $18 Million with the highest tier tax rates. Where did that come from and why hasn't his tax returns been a matter of public record?

    Where did that money come from?

    And how is it allowed for Harry Reid to stand before the American people and lie about Obama-care? How is it allowed that he has failed to allow the Senate to even DISCUSS a budget for 4 years let along vote on one?

    How is it that Obama has conducted a government without a budget contrary to law?

  • Report this Comment On January 10, 2014, at 1:11 PM, magickj wrote:

    If the government really cared about our health, they'd label GMO foods, remove fluoride from the water, tell parents that vaccinations can be lethal/damaging, tell the public that the flu vaccination doesn't work and never has, promote wellness, stop chemtrailing our skies, stop feeding kids junk/mystery food at schools, promote organic food and nutrition.

    So far, more people have lost their insurance than have signed up. Many people do not realize that the subsides are a LOAN and when you die, the system will figure out how much you will owe - including any money, cars, homes, or valuables - to pay for your medical treatment - and your progenitors will get NOTHING!

    Obamacare is based on the same model as Romneycare - so it doesn't matter who was elected president - POTUS is just a puppet of the corporate elite.

    This very will may be the straw to break America's back. I smell another bail out on the horizon - this one to the insurance companies.

  • Report this Comment On January 28, 2014, at 7:46 PM, nancykarnold wrote:

    @Gyms. Love this! CAN YOU SAY Chicago bullystyle kickbacks?

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