Obamacare’s Pricetag Continues to Grow
Consumer Power Report #428
One of the underrated facts about American health care is that in advance of the passage of Obamacare, the majority of Americans wanted a reform that tackled one thing above all others: price. That’s why President Barack Obama chose to sell his legislation not on the real aim of achieving dramatic coverage increases, but on the promise of bringing down premiums by $2,500 for the average family.
Of course, the opposite has happened: We’ve continued to see premiums go up across the country. According to a new paper from Gov. Bobby Jindal’s think tank, Americans have faced a cumulative $6,388 higher premium costs per individual, and $18,610 per family, under Obama’s policies.
Contrary to candidate Obama’s promise, health insurance premiums have continued to rise every year President Obama has been in office. Compared to a baseline year of 2008 -- the year Barack Obama was elected -- the average family premium for employer-sponsored coverage rose by more than $2,500 -- $3,671, to be precise. …
Individually, ever-rising insurance premiums place a tremendous squeeze on a hollowed-out American middle class -- but collectively, these costs amount to a massive weight on an American economy struggling to grow. All told, the American people have faced $1.2 trillion in higher health insurance premiums due to Obamacare’s failure to deliver.
No wonder Democratic politicians are worried about these trends. They understand most Americans expected Obamacare would bring coverage up and premiums down, when that’s just not the case. As the bipartisan Center for Health and Economy details here, premiums are expected to continue to rise, and the cost for taxpayers is expected to grow, to a total cost for the taxpayer of $3.33 trillion, and with premiums growing:
Average subsidized premiums are expected to fluctuate between 2014 and 2016, as a result of a growing risk pool and increased participation of the young and healthy. After 2017, average subsidized premiums are expected to increase by 6 to 10 percent annually. …
As premiums and health care costs rise, plans chosen in the individual market are expected to shift towards lower cost options. High subsidized enrollment in silver plans is projected to fade after 2014, as enrollment grows among households that are eligible for subsidies but not silver-plan cost-sharing. …
The coverage provisions of the ACA and Medicaid for the non-elderly are estimated to cost the Federal government $3.33 trillion over ten years.
Will those premium increases be hidden by subsidies? See the image below for what the CHE estimates we should expect to see over the coming decade for the average subsidized premium after taxpayer funded credits:
The costs of Obamacare can never be fully understood. But the trendlines are clear: higher costs for taxpayers funding subsidies, and higher premium costs for those who purchase insurance. And that seems unlikely to change any time soon.
-- Benjamin Domenech
IN THIS ISSUE:
The A.C.A. was primarily about access: making it easier for people to get insurance and the care it allows. The law also tries to make changes that may bend the curve of spending over time, but it’s important to acknowledge that of the three components of health care systems, access was the primary focus.
It is true that some people use the emergency room for minor problems. But that lack of access isn’t all about insurance. Even for the insured, one of the major reasons people use the emergency room is that it’s more convenient. That doesn’t change with the A.C.A.
It’s also important to remember that emergency room care is not free. It’s very expensive, and hospitals have been known to go after people aggressively to be paid. Going to the emergency room wasn’t a “better” option for those who were uninsured. It was the only option.
There were many people without insurance who would have benefited from care, but didn’t get it because they couldn’t afford it. It’s likely that, given Medicaid or very cheap private insurance, they would choose to obtain that care. There’s no reason they wouldn’t use the emergency room to get it, and that turns out to be what has happened in practice.
A study published in March examined how the health care overhaul in Massachusetts affected emergency department use there. Researchers found that increased insurance coverage resulted in more use of the emergency department, regardless of age and issue. Another study published on the Oregon Health Insurance Experiment found that giving people Medicaid also increased their use of the emergency department.
Even more recent studies show that increasing people’s access to care increases their use of more invasive care. Researchers in Michigan compared the prevalence of surgery in Massachusetts, New Jersey and New York both before and after Massachusetts went to universal insurance in 2007. They found that expanding coverage was associated with a more than 9 percent increase in discretionary operations and a 4.5 percent increase in nondiscretionary ones. They estimated, based on their results, that the A.C.A. could lead to more than 465,000 additional discretionary surgical procedures within a few years from now.
SOURCE: New York Times
The Affordable Care Act is the worst piece of legislation ever passed into law in the United States. It was poorly conceived, poorly written, poorly enacted, and is being poorly implemented. The thing is a mess. However, it does open up some doors that were firmly locked before--things that most free-market economists have been espousing for years without success. We should not run away from those things just because they have President Obama’s name on it.
I am not talking about the things the idiot media think are popular--the slacker mandate, open enrollment, equal premiums for men and women, and free “preventative” services. These are all terrible ideas for reasons I won’t go into here (unless you insist). I’m talking specifically about several more important elements of the law that were not well crafted in this particular bill, but can now be used as precedents for major improvements in American health care. For example:
1. Breaking the tie between employment and health insurance. It is simply not possible to overstate how important this is. The advantages given exclusively to employer-sponsored coverage have badly warped, not just the health care system, but employment and labor policy, as well. It also spawned the creation of Medicare and Medicaid. These programs were enacted in 1965 in part because the elderly and the poor were the two groups of Americans who could not benefit from the health care advantages government gave workers.
Most people are aware that the only reason we have a job-based insurance system is as an artifact of the wage and price controls of World War II. Companies couldn’t attract workers by offering higher wages, so they offered “fringe” benefits instead. The Internal Revenue Service said such benefits would not be considered taxable income. They were “excluded” from the tax rolls.
This might have worked in the post-war era when families were typically made up of a single-wage earner who worked for the same company most of his (usually a “his”) life, and divorce was uncommon. But it makes no sense at all in today’s society where people change jobs frequently, both spouses work, divorce is common, and child-rearing responsibilities are divided. It is typical today for a husband and wife to each get coverage from his or her own employer and make kids a jump ball depending on which parent has better dependent coverage at any given time.
SOURCE: The Federalist
Responding to an inquiry concerning the latest request from Graves, CMS officials explained that, unlike on the individual exchange, employers are not required to first verify their eligibility with federal regulators before enrolling in a plan on one of the state-based or federal small business exchanges.
Moreover, because employers using the small business exchange may enroll at any point during the year -- unlike shoppers on the individual exchange, who have a limited enrollment window -- they say the numbers on the small-business sites are harder to track.
In the absence of national totals from HHS, we can still get a sense of the enrollment based on anecdotal evidence from states that elected to run their own health insurance marketplaces.
In the District of Columbia, for instance, roughly 45,000 people have enrolled in plans through the city’s health care exchange, known as DC Health Link. However, fewer than 600 of those are employers or employees who signed up through the small-business portal.
New York’s state-run exchanges, meanwhile, have racked up nearly a million enrollees, but only about 10,000 came in through the small business marketplace. In California, through the end of March, 1.4 million people have signed up through the individual marketplace, while only 5,000 had bought plans through the SHOP exchange.
SOURCE: Washington Post
[Vermont Gov. Peter] Shumlin kept faith with his single-payer supporters. He persuaded the heavily Democratic legislature to pass Act 48, the blueprint for single-payer, taxpayer-financed, government-controlled health care. The Act declares that Vermont shall have a fully government-controlled and taxpayer-financed “health delivery system.” This was formerly promoted as “single-payer,” until that term became a political liability as more and more Vermonters discovered what it stood for.
Now it’s called a “public-private universal health-care program” making “single payments” and enforcing its “global budgets” on health-care providers. Even Shumlin has retired “single-payer,” partly because it suggests the Quebec system that is not working so well, and partly because when “Green Mountain Care” is realized in 2017, there are likely to be at least five payers: Green Mountain Care, Medicare, Tricare, self-insured (“ERISA”) companies, and federal employees.
The key to passing Act 48 was the Hsiao report. This was a comprehensive plan presented in 2011 by consultant William Hsiao of the Harvard School of Public Health. Hsiao is noted for devising the Resource Based Relative Value System that has bedeviled the Medicare system since 1993.
Hsiao told the legislature that his single-payer plan would result in $580 million in first-year health-cost savings. These enormous savings in a small state (it will have a projected $6 billion in total health-care costs in 2017) were to flow from eliminating insurance companies with their advertising, administrative costs, and profits. This would allow the powerful Green Mountain Care Board to ensure to everyone “affordable and appropriate health care at the appropriate time in the appropriate setting” as determined, of course, by the board, always in light of available resources. Wow! What could be better?
One crucial key to instituting GMC is obtaining an Obamacare waiver from the Department of Health and Human Services in 2017. The waiver would allow Vermont to substitute single-payer for the Obamacare insurance regime. The waiver would also provide that an amount equal to the total tax credits handed out in the final year of the state’s Obamacare exchange (“Vermont Health Connect”) would be collected into one large bag and delivered to the state to finance single-payer each year.
When that day arrives, Vermont’s two surviving health-insurance carriers -- Blue Cross Blue Shield of Vermont and Albany, N.Y.-based MVP Health -- will cease to exist, except possibly to offer Medigap-style coverage for some as-yet-undefined form of patient cost-sharing.
Some serious missteps occurred on the way to Vermont’s implementation of the Hsiao report. First, the legislature’s veteran Joint Fiscal Office director, Steve Klein, informed the solons that, while their single-payer plan would produce cost savings for the first two years, over the longer term health-care costs would rise faster than revenues. “It’s not going to be a pretty picture,” Klein said. Their enthusiasm remained undimmed.
Then medical-malpractice reform, which Hsiao said would produce a fifth of the spectacular savings, disappeared into a study committee and was predictably crushed by the personal-injury plaintiff’s bar.
A few brave souls in the legislature wanted to know -- before the 2012 election -- just where the governor was going to get the money to pay for whatever the Green Mountain Care Board thought was “appropriate etc.” The Shumlin forces set the report date two months after the election, and a Republican effort to make the governor tell the voters in October was hammered down on party lines.
When the statutory January 2013 report date arrived, the governor refused to produce the mandated report. It’s now the summer of 2014, and Shumlin, having forsworn deadlines, now says the citizens will get the news in 2015, after another election.
The news, incidentally, will be frightening. Two independent analyses of the likely cost of Green Mountain Care, above and beyond federal subventions, found that it will likely require a $2 billion tax hike. This, in a state whose general-fund budget is $1.44 billion.
SOURCE: National Review
Of the four surveys cited, the Gallup survey has been around longest, with surveys measuring adult uninsured risk dating back to first quarter 2008. Even a casual scan of the latest chart of quarterly figures over this period should give readers some pause, as the figures have jumped all over the place during the 6-1/2 years charted. It’s been as low as 14.4% (Q3 2008) and as high as 18.0% (Q3 2013) with no particular rhyme or reason to the patterns. This is not at all surprising in a survey with a margin of error of +/-1%, but it raises the obvious question of where on this rollercoaster to start counting any changes that might be attributed to Obamacare.
If we start from the highest point the uninsured rate ever reached (18.0%), then Obamacare has reduced adult uninsured risk by more than 25%. But if we start at the first quarter of 2010, right before the law was enacted (16.3%), the reduction is more modest. But if we start at the 3rd quarter of 2008 on grounds that the unemployment rate then was nearly identical to today’s rate, then the reduction in the uninsured rate is only 6.9% (i.e., 1 percentage point). This reduction is so small that if these 2 points were the only data we had, the observed reduction between Q3 2008 and today would not be statistically significant. And even if it were, how many Democrats would have enthusiastically voted for a bill that spent nearly $1 trillion over a decade yet had only reduced the number of uninsured by less than 7% four years into implementation?
The state of Oregon appears to be nearing what could be a first-in-the-nation stance limiting availability to Medicaid patients of new hepatitis C treatments that offer great promise at a very high price of $84,000 per 3-month treatment.
On July 31, a state committee will consider guidelines intended to limit treatment only to patients who face serious liver damage without the drug. If adopted later this year, the approach would reduce the state’s costs from an estimated $168 million in the coming year to about $40 million.
“We are still wrestling with how to address the fact that this is a drug that is very expensive and that we simply can’t afford,” said Tom Burns, director of pharmacy programs for the Oregon Health Authority. “We can’t afford to treat everybody.”
The Oregon move would come in addition to an investigation launched Friday by U.S. Sens. Ron Wyden, D-Ore., and Chuck Grassley, R-Iowa, upping the pressure on the maker of one of the new hepatitis C drugs, called Sovaldi. Wyden chairs the Senate Finance Committee and Grassley is one of the committee’s senior minority party members.
An overwhelming majority (78%) of respondents are comfortable with what they are currently paying for prescription drugs. But specialty drugs like Sovaldi elicit a different response, with 57 percent of respondents saying they are “very concerned” that they would not be able to afford high-priced specialty drugs should they or their family need them in the future. High-priced specialty drugs are also seen as one of the driving forces behind increased health insurance premiums.
This poll was conducted from July 9–11, 2014, among a national sample of 2010 likely 2014 voters. The interviews were conducted online and the data were weighted to approximate a target sample of likely voters based on age, race/ethnicity, gender, educational attainment, region, annual household income, home ownership status and marital status. Results from the full survey have a margin of error of plus or minus two percentage points.
SOURCE: Morning Consult