Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



11 Million Examples of Obamacare's Higher Costs

How many Americans will pay higher insurance premiums as a result of Obamacare?

That's the question posed by Congress to the Centers for Medicare and Medicaid Services, or CMS. More specifically, Congress required the Chief Actuary of CMS to give an estimated count of the number of Americans who will pay more, and how many will pay less as a result of three sections of the Public Health Service Act that were amended by the Affordable Care Act, commonly known as Obamacare. And now the numbers are in.

11 million examples of paying more
Actuaries with the government agency estimate that around 11 million individuals will pay higher rates because of the health reform law's impact. Six million Americans will pay less as a result of Obamacare. 

CMS focused only on the small employer market. That's because the specific sections it was required to research didn't have a big impact on rates paid by employees of larger organizations. Also, the directive from Congress didn't require CMS to evaluate several significant components of Obamacare, including extension of dependent coverage to age 26, the individual mandate, and the employer mandate.

The actuaries found that nearly two-thirds of employees of organizations with 50 or fewer workers will experience insurance premium increases. Their report stated that there was "considerable uncertainty" whether many small employers will opt to eliminate offering health insurance altogether.

What's behind the rate increase for millions of workers? CMS says it's because they paid less than average prior to implementation of Obamacare. The underlying premise is that small organizations with healthier workers were more likely to offer health insurance in the first place -- and enjoyed lower premiums below the average of the broader market.

With Obamacare, though, insurance companies are restricted on how premiums are set. For example, premiums for an older individual can't be more than three times greater than those for a younger person. Premiums for smokers can't be more than 1.5 times higher than for non-smokers. Rates also can't differ because of gender. These and other components in the health reform legislation contribute to potential premium hikes for many -- but they also lower the amounts paid by some.

No estimates were provided as to how large the rate increases could be. However, a study by actuaries with Oliver Wyman used a database with insurance claims from over 6 million people to project average national premium hikes for small employers of 20%. 

Two examples for making more
If you're an investor, though, there could be a way to make money from this trend. Actually, there are at least a couple of examples of how it could be done.

Many individuals will probably choose insurance plans with higher deductibles and health savings accounts, or HSAs, to lower their overall costs. This approach provides ample financial incentives for people to take more ownership of their health spending.

One way this increased ownership could manifest itself is through more personal research about ailments before seeking professional medical care. WebMD (NASDAQ: WBMD  ) stands out as a prime beneficiary from this potential scenario. The company is the leading provider of online health content. It has also mounted a nice turnaround since early last year after battling sluggish advertising spending by customers in 2012.  

Despite a little softness in the first quarter of 2013, I think WebMD should still be a smart long-term pick. It continues to rank first among online health information sources and is experiencing strong growth from mobile device access. If increasing numbers of Americans look online for medical information to make better choices on health spending, as I suspect they will, WebMD wins.

Pharmacy benefits managers, or PBMs, could present a second way to potentially profit from the move to HSAs and plans with higher deductibles. PBMs' earnings increase when individuals choose lower-cost drugs, especially generics, and when they adhere to prescribed schedules instead of wasting medications. If you're having to pay more out of your pocket up front for prescription drugs (as you would with an HSA plan), these are exactly the types of things you would want to do.

The biggest PBM in the nation, Express Scripts (NASDAQ: ESRX  ) , should reap rewards if this scenario plays out. Express Scripts disappointed some investors by reporting earnings last week that met analysts' expectations but also announced declining year-over-year revenue.  

That decline doesn't worry me, though. A big factor muddying Express Scripts' numbers of late has been the transition of UnitedHealth Group (NYSE: UNH  ) to its own OptumRx PBM. Take away the UnitedHealth numbers, and Express Scripts sports some pretty nice growth. The company thinks it will grow earnings by 10% to 20% annually over the next few years.

Millions of Americans will pay more for health insurance under Obamacare if the CMS actuaries are right. They'll pay a lot more if the Oliver Wyman actuaries are right. But smart investors could do well if the reasoning given above is right. And it doesn't require any expertise in math. 

Will you pay more under Obamacare?
How will Obamacare impact your pocketbook? The health reform law seems complex, but it doesn't have to be. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." This FREE guide contains the key information and money-making advice that every American must know. Please click here to access your free copy.

Read/Post Comments (22) | Recommend This Article (8)

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 March 01, 2014, at 6:46 PM, SLTom992 wrote:

    The estimates are the EVERY state except New York and Vermont will have increased costs between 12% and 125%. It's a Liberal's dream come true.

    We should have a vote in every single state about who supports Obama-care and those who do should pay the entire cost of it. Since they believe themselves to be a huge majority then it certainly wouldn't be any problem would it?

  • Report this Comment On March 01, 2014, at 9:28 PM, quacker wrote:

    my wife is going to have outpatient surgery, my out of pocket is going to be 6350 for the room not the surgeon or the sleepy time doctor, just the room, no biggy for me, you can you stroke a check for a room at 6350 out of savings? most cant so whats the choice, die, well since she and I are long term married white people I am sure obama would be okay with that, since he thinks only minority youth need help

  • Report this Comment On March 02, 2014, at 2:54 PM, PaulSell wrote:

    Harry Reid says all these people are Liars. After all the President and his administration have certainl been up front about all the issues. Recently when asked specifically about all the "cooking of the books" on OB☭M☭C☭RE ● & enrollment numbers & the CBO job loss report, Kathleen Sebelius, (AKA Mrs. Bagdad Bob), smiled and said, "Pull my finger." When the exact question was also posed to Barry, he tucked in his chin and gave a big toothy smile and said, "I just love that Yahoo picture of me with the Great Seal behind my pointy head, that looks like a halo on me. In addition I just want you all to know, I have a Bic Pen and an Obamaphone."

    Republicans are now just waiting for Barry & Company to work the kinks out of his legacy legislation OB☭M☭C☭RE●! After all this isn't just more of your Dear Leader's shuck and jive stuff, this is about millions of people's lives. The Republicans have promised to get right on Global Warming, as soon as

    OB☭M☭C☭RE● smoothes out with the millions of lives it has disrupted. Barry was quoted as saying, "When I go out and say the, "You like it you can keep it's... for years and still just as recently as the SOTU, constantly fudge my numbers and get 4 Pinocchios from the Washington Post the next day for it, I JUST CAN NOT UNDERSTAND WHY "YOU PEOPLE" STILL DON'T BELIEVE MY SHUCK & JIVE SH!T ANYMORE? I know you're all struggling and I want you to just reflect back to Christmas. It only cost you tax paying suckas' $800,000 to bring my main squeeze "Snuff Lip" back from her extended stay in Hawaii. Now, for you millennials: "Welcome to YOUR OB☭M☭C☭RE●! The Liberals, that now have to survive re-election with this albatross hanging around their socialist necks, STILL have to convince you soft headed millennials into another suicide vote for them again. Maybe we, Barry & Company, can just chat up Global Warming, Pot Legalization, minimum wage increase, and Income Inequality, while carefully avoiding your slim to none chances at even getting a job. We Dems are still just going to encourage you boneheads into believing that the lying Dems are actually going to make your lives so much better."

    RE:OB☭M☭C☭RE ● Barry has clearly stated he wants his legacy to be, that he is remembered for just 2 things: OB☭M☭C☭RE ● & being Vladimir Putin's BlTCH!

  • Report this Comment On March 02, 2014, at 3:50 PM, CommieLibNot wrote:

    Clinically, the ACA reduces traditional and preventative care. Important drugs and procedures are no longer covered under the ACA. Medicare cutbacks will have many seniors in a world of hurt. It's shifting to "pay out of your own pocket" care. Clearly, pre-existing conditions could have been eliminated without blowing up the whole system. So now we are destroying the higher quality of care that 90% of the country had earned a right to. Liberal economic stupidity and then their stubbornness is costing America. Taking away freedoms and then forcing massive taxes is the Dem way - but he wrong way.

  • Report this Comment On March 02, 2014, at 4:03 PM, ferdiefor wrote:

    I am sorry, just came out of a coma. How dare anyone say our messiah and savior, Barack Husain Obama has been lying to us from day one about Obamacare?

  • Report this Comment On March 02, 2014, at 5:16 PM, Dayo2 wrote:

    YouTube First Robotic surgery center in Dominican republic

    Type this on your computer and see how other countries are way ahead of the United States. Many Americans are also flying down for many surgeries that is very highly better than the U.S. and 12 times cheaper. Also get on Fox News and many others. The one percent is in charge of our Doctors and destroying American's Medical procedures.

  • Report this Comment On March 02, 2014, at 5:58 PM, thl07 wrote:

    And this is a surprise. Every actuary in America knew that the ACA would raise costs. It's basic math. If you add the 20% sickest people into a system that would not accept them before ACA, the 80% in the system will pay more. The real surprise is the lack of knowledge by most Americans how imbalanced the system was. Survey after to survey suggests everyone thinks the 20% should be able to get coverage, but at the same time they don't want to pay for them. Both sides have no solution for this problem. The Dems lied about the outcome and Reps lied about the design. It's basically a republican idea implemented by a democratic president.

  • Report this Comment On March 02, 2014, at 6:43 PM, Mikeyh0 wrote:

    Wasn't Obamacare supposed to insure the 30 million or so that didn't have insurance? Whatever happened to that plan?

  • Report this Comment On March 02, 2014, at 6:47 PM, airjackie wrote:

    The good old days in America when all Americans paid in the State/Federal taxes and minorities got nothing because they had no rights. Our economy grew with profit and laws set for Americans with rights. My grandmother born 1889 and worked as a child to adulthood. She retired in 1962 after having paid taxes by law to both State/Fed. Interesting she did not receive Medicaid or Social Security until the son of her former employer reported it in 1986 to the Social Security Dept. Well she did receive a check for each month until see died March 1987. A litter with the first check explained blacks paid benefits noted with only their social security number but names were not included for payment. Wow let's see the law took place in 1935 and she paid 27 years. I got to hear Rep. Paul Ryan who lost his Dad in 1987 but the family received full benefits due the death. Well many old time racist feel that old plan could fix the US economy again just have minorities/immigrants pay in but get nothing.

  • Report this Comment On March 02, 2014, at 7:00 PM, gulfcoastrebel wrote:

    Time out! 1) Most people might not be aware of it, but insurance premiums go up every year - "Obamacare" or no. Republicans like to attribute every bad thing that happens on the face of the earth to the health care law, since they think that's a big issue this election year. There are multiple factors for premium increases. 2) Comparing premiums of present insurance policies is just looking at a small, cherry-picked slice of data, completely overlooking the millions who DID NOT have insurance before the law, who now can.

  • Report this Comment On March 02, 2014, at 7:08 PM, hisaw100 wrote:

    No way. B.O. would not let this happen. Not on his watch. B. O. will put Joe this right away. As soon as he finishes the 18th hole...

  • Report this Comment On March 02, 2014, at 7:27 PM, JePonce wrote:

    The Supreme Court was prepared to find Obamacare in violation of the Commerce Clause by an informal vote of 5 to 4. But John Roberts, either wishing to show Obama he could be a team player, or actually being a Democrat in a Republican black robe directed the discussion toward a tax, which is the basis of it's questionable constitutionality. It violates the commerce clause, and it violate the citizens right to privacy.

    Robert's is a traitor, no matter how you slice it. If he were elected, instead of appointed for life, he could be voted out in the November election.

    In a letter, dated September 9, 1819, addressed to Judge Spencer Roane, Jefferson more clearly defines his concern, “The constitution…is a mere thing of wax in the hands of the judiciary, which the may twist and shape into any form they please.”

    Our legal system was founded on seeking truth and administering justice. Leftists have evolved the constitution into a living, breathing document, and no focus on ignoring truth and administering fairness and economic expediency.

  • Report this Comment On March 02, 2014, at 7:38 PM, JePonce wrote:

    The median income for whites increased 38.21% from 1967 to 2001. Black median income rose over 604.76% during the same period.

    On Bush's watch White income grew 54.50%, and black income grew 55.28%.

    On Obama's watch White income has grown 56.24% and black income has grown 54.20%

    Source: U.S. Census Bureau

  • Report this Comment On March 03, 2014, at 1:23 AM, dusty10x wrote:

    11 million trespassers waiting to get on free healthcare, medicare, welfare, etc........That is the hole that will sink our ship....

  • Report this Comment On March 03, 2014, at 6:16 AM, shermanmayes wrote:

    I can Not believe the B.S. that Barrack Obama,and

    our Federal Government,has placed on every voter

    and American,with his Obama Care !His word as a President,holds as much water as a Sifter.He is the

    Worst president,in my life time.and could not lead

    a cub Scout,out of a local park,unless he himself had a guide,directing him in the right path. How and

    why he is not impeached,due to his abuse and misuse of our Constitution,freedom,under that same

    Document that he says and make up story after false story,how great his plan is and will not increase

    (but did increase you cost),is a bald face lie, from the start.People are angry,and will show,those cowards,on both sides will pay a price,from the

    people who are tired of Liars,and Lies. The Tea

    Party candidates have woke up the people and

    has stood,strong as to there belief,s and 75%

    of the General public,that Our Debt is way to high

    and we are close to bankruptcy. Division,is getting

    larger on the race issue,because of Obama,s action.We have become a sick,party sucking

    people,and we need to be a builder of America,

    Obama,must be held accountable,and his administration,for lies,Not promoted,like Susan Rice and Hillary Clinton,nor John Boehnner ,or

    John Cornyn,John McCain,Harry Reid,its time

    the old and young boneless jelly fish leave office

  • Report this Comment On March 03, 2014, at 6:22 AM, shermanmayes wrote:

    Swing Low, sweet Chariot,He,s coming to Carry

    me Home!

    But Not in Heaven,But the place of his Birth, Good

    BY! Don't forget to turn off the lights,before you leave,

  • Report this Comment On March 03, 2014, at 6:35 AM, shermanmayes wrote:

    This Racist,pig,Liar,and destroyer of our,economy,

    security,freedoms under the Constitution and the

    rest of His Piglets in Washington D,C, and that

    covers,both Parties,has done little,to protect us

    and our security,and National interest, to include

    home are world,affairs,is beyond a Fools Grasp.

    We have been made the Fools,by a Fool and appears we have a lot,working,in our Government

    Today. Barrack Obama and all who agree with him,

    will ( I HOPE ) Find the Hottest place in Hell when

    they get there,because all deserve what they,have

    lied,squealed and lie pigs,love Slop and Mud,of

    Politics,that,we have to eat,pigs fat and have heart attacks,as a result of their lard, A___S

  • Report this Comment On March 03, 2014, at 6:44 AM, DoodDemocrat wrote:

    Socialism is here to stay whether you like it or not. Obama is our savior. Smart Americans will realize that trying to get ahead by working harder is foolish. Why slave away when you can slack off and let someone else work themselves to the grave while you can collect your Government benefits and enjoy life? Those idiot small business owners deserve what they get, thinking they can ever get ahead by working let them do it...the more harder they work, the more the Government will take...idiots.

  • Report this Comment On March 03, 2014, at 7:30 AM, Chevynuts33 wrote:

    This rising cost is the very Reason the employer mandate gets pushed back for election timing. Maybe it is time Americans understand the they are being played like the proverbial fiddle with their wealth being the Rome the legislators are burning down.

    Maybe we will simply watch and listen to the fiddle, as 'Rome' burns.

  • Report this Comment On March 03, 2014, at 9:25 AM, bk2000p wrote:


    Hope you are not aligned with the T-Party nuts. Unless you have a detail plan for the Obama Health Care alternative, you just stay on Wall Street Casino discussions. If you have such alternative plan then just put it over here so we can compare its plus and minus.

    Do not be real FOOL!!!!

  • Report this Comment On March 03, 2014, at 11:56 AM, lightnin001 wrote:

    bk2000p - Presume the bk stands for Burger King, and no, I don't want fries with that! We won't be submitting anything for your approval, nobody cares what you think, and you will never be in any position of authority. Have a nice day.

  • Report this Comment On March 03, 2014, at 1:18 PM, kfkna wrote:

    lol too funny - how you can call it Obamacare when repubs had so much taken and added to get what they wanted. I'd say it was a joint, communal, shared, collective of higher costs!!

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2852297, ~/Articles/ArticleHandler.aspx, 9/4/2015 2:04:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Keith Speights

Keith began writing for the Fool in 2012 and focuses primarily on healthcare investing topics. His background includes serving in management and consulting for the healthcare technology, health insurance, medical device, and pharmacy benefits management industries.

Today's Market

updated 4 hours ago Sponsored by:
DOW 16,374.76 23.38 0.14%
S&P 500 1,951.13 2.27 0.12%
NASD 4,733.50 -16.48 -0.35%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 4:00 PM
ESRX $83.86 Up +0.37 +0.44%
Express Scripts CAPS Rating: *****
WBMD $39.14 Down -0.43 -1.09%
WebMD Health Corp. CAPS Rating: **
UNH $113.99 Down -0.24 -0.21%
UnitedHealth Group CAPS Rating: *****