ObamaCare’s impact on health costs.

“ObamaCare’s middle class insurance subsidies are one of the law’s most popular features for obvious reasons. But the existence of the subsidies sets up a serious potential problem: What happens politically when it’s discovered that between two families making roughly the same amount of money, only one has access to a subsidy?”

“Of course, I imagine that at this point supporters are saying that the best is yet to come–that ObamaCare just hasn’t really gotten going yet. Perhaps so! But this is the one year report card, and the first-year grades are pretty underwhelming.”

“Our review of the research has found that there is no credible evidence of a cost shift of any substantial consequence, either within state boundaries or across state lines. Moreover, the new law will likely generate more cost shifting—the opposite of what its supporters would have us believe.”

“The ACA contains insurance reforms, medical device taxes, pharmaceutical fees, and insurance company
fees that will raise the cost of insurance for millions of individuals, small businesses and households.
This analysis suggests that the insurance tax in isolation will raise premiums by roughly 3 percent. An
important topic for future research is to perform similar analyses for the other cost-raising aspects of the
ACA in order to assess the overall pressure on premiums.”

“The new federal health care law may eventually ‘bend the cost curve’ downward, as proponents argue. But for now, at many workplaces here, the rising cost of health care is prompting insurance premiums to skyrocket while coverage is shrinking.”

“So mandates probably help explain part of the story. But government-subsidized coverage is likely a large factor too. Yet the response of those who authored the PPACA was not to change the way the government provides coverage. It was to expand the subsidization of generous coverage and, at the same, time, make it more difficult for insurers to weed out waste through activities like fraud prevention and utilization review. A decade from now, I suspect, The New York Times will be telling the same story.”

“At the same time, it’s not clear how hospitals will save money through integration. Many proposed cost-reduction measures–such as new electronic medical-records systems–involve expensive up-front capital investments that may not yield savings.
Further, ObamaCare calls on providers to deliver more care–not less–through the ACOs. The president and his allies hope that elevated levels of primary and preventive care for Medicare patients will head off the need for surgeries or other expensive procedures down the road.”

“In light of all this evidence about the benefits of hospital competition, it might be surprising to learn that the new health reform law will decrease rather than increase competition between hospitals due to the encouragement of Accountable Care Organizations (ACOs). ACOs will not be implemented until 2012, but already hospitals are buying out physician practices to create what amount to, in many locations, geographic monopolies that will restrict patient choice and stifle innovation.”

“One way to think about all this is to see the ACA as a sham of sorts. Long before the passage of the bill public opinion polls consistently showed over many years that the average voter was willing to pay only $100 or so to insure the uninsured. If you think about it, everything that has come out of the White House and other administration officials is consistent with that finding. ObamaCare, we are being told, is one big free lunch. No one’s premium will be higher. No one’s wage will be lower. Millions of people are supposed to benefit and no one is acknowledged to be the slightest bit worse off because of it.”

“If waivers are necessary to keep 733 insurance plans in place now, think of what will be necessary in 2013, when the amount policies must cover in a year will be nearly three times that cost, or in 2014, when full-blown PPACA kicks in and insurers are prohibited from offering a policy without unlimited coverage. The waiver option will be gone: nothing in PPACA gives HHS the authority to waive the statutory ban on annual limits. At the same time, other parts of PPACA will require Americans to have more comprehensive insurance than what they have now. Ineluctably, the result will be to require Americans to purchase insurance packages far more comprehensive and far more costly than what HHS has already determined in 733 cases is too expensive to buy.”