ObamaCare’s impact on health costs.
The average monthly ObamaCare premium grew by about 5 percent over last year once financial assistance is factored in, according to government data released Friday.
The average monthly premium on the ObamaCare marketplace is $106 this year, compared to $101 last year, according to a new Department of Health and Human Services (HHS) report.
Those figures factor in the financial assistance under the healthcare law that substantially lowers the premiums consumers have to pay. Eighty-five percent of enrollees qualified for financial assistance.
Ask the price of anything and the answer is always the same: What insurance do you have? Patients are blocked from shopping for fair value. The part of the Affordable Care Act which was supposed to control insurance costs, perversely, incentivizes insurers to pay higher, not lower costs. Under the Affordable Care Act, premiums and profits are legally permitted to rise only as health costs rise. In short, when it comes to pricing, nobody is watching the store and citizens cannot shop to protect themselves from medical price gouging.
This former hospital president says that because billing rates are not set, the health industry is able to prey on patients at their most vulnerable. And if you are out of network or uninsured, you pay the highest rates.
This year my family joined millions of others whose health-insurance premium has become their biggest annual expense. More than our mortgage. More than our property taxes. More than our state income tax. More than our annual food or energy costs. With this year’s $194-a-month premium increase, I could roughly buy a Chevy Sonic or Ford Fiesta. Since 1999 our premiums are up 350%. Bad as this is, the story gets worse.
Each year our family is subject to paying health-insurance premiums and, if we see a doctor, deductibles and copays. Think of this total exposure as “health-care cost risk”—the sum of certain payments (premiums) plus the potential payments you could incur (copays and deductibles).
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Forty-three percent of Americans expect to pay more for health care this year than they did last year, according to a survey released Tuesday from GOBankingRates.com, a personal finance and consumer banking website.
About one-fourth of respondents (23 percent) said they expect to pay “a little more than the last year,” and 20 percent said they expect to pay “a lot more than the last year.”
High-deductible health plans (HDHPs) are increasing in prevalence in both the group and individual markets. In the group market, rising insurance costs make HDHPs more attractive to employers. Employers now spend an average of $5,179 and $12,591 on health insurance premiums for their employees in individual and family plans, respectively. A recent Henry J. Kaiser Family Foundation of employers shows that deductibles have increased 67 percent since 2010. Nearly one-quarter of workers are enrolled in an HDHP, up from 4 percent in 2006. Nearly half of workers are covered by an insurance plan with a general annual deductible of at least $1,000 for individual coverage.
In the individual market, almost 90 percent of enrollees in Affordable Care Act Marketplaces are in a plan with a deductible above the amount that qualifies a plan as an HDHP: $1,300 for an individual and $2,600 for a family (not including cost-sharing reductions) in 2015. The increasing number of enrollees in and prevalence of HDHPs raises a number of policy questions.
Deductibles and other forms of cost-sharing have been creeping up in the United States since the late 1990s. A typical employer health plan now asks an individual to pay more than $1,000 out of pocket before coverage kicks in for most services. The most popular plans on the Affordable Care Act exchanges require customers to pay several times as much. Even Medicare charges deductibles.
People tend to hate these features, but they were not devised to be cruel. Rather, they were fashioned with economic theory in mind. Deductibles and co-payments are intended to make patients behave more like consumers in other parts of the economy.
New research suggests that high deductibles in particular may not work as intended. A team of researchers at the University of California, Berkeley, and Harvard recently published a working paper on what happened when a large (unnamed) employer switched from a more generous health plan to one with a high deductible.
Spending fell by about 12%, a remarkable decline. But the way workers achieved those savings gave the researchers pause. There was no evidence that workers were comparing prices or making wise choices on where to cut, even after two years in the new plan. They visited the same doctors and hospitals they always had.
Since October, at least six independent and credible sources have confirmed rate increases on the ObamaCare exchanges will be in the double digits. However, these are gross premium hikes. Net premium hikes paid by enrollees are distorted by tax credits paid to insurers. These badly designed tax credits have a number of perverse consequences. It is widely understood that they impose disincentives to work. What is less well understood is that the tax credits are so badly designed that they impose a ratchet effect causing net premium hikes greater than the gross premium hikes. According to new research published by the National Center for Policy Analysis, this effect is concentrated among ObamaCare enrollees in the lowest income brackets.
We shouldn’t be surprised that health insurance premiums continue to rise at record rates — by 15-20% for many employers and their employees in 2016 alone. Between private insurance, Medicare and Medicaid, the number of insured Americans has grown dramatically to nearly 90% of the population. While more people than ever before are seeking health care services since the passage of ObamaCare the supply of physicians, hospitals and outpatient treatment facilities has not kept pace.
It is a fundamental concept of economics that when demand is increased and supply is restricted, prices rise. But for more than 40 years, state and federal governments have used a heavy hand to limit the supply of new doctors and hospitals entering the market, as well as facility expansions and equipment purchases.
Freedom Partners Chamber of Commerce has analyzed all publicly available information for health-insurance premiums from healthcare.gov and state insurance departments. It then calculated the weighted averages for all health-insurance plans available on the Affordable Care Act’s exchanges. The weighted average gives a more accurate view of overall premium increases, because it takes into account each insurance plan’s market share.
Findings reveal that nationally, premiums for individual health plans increased on average between 2015 and 2016 by 14.9%. Consumers in every state except Mississippi faced increased premiums, and in no fewer than 29 states the average increases were in the double digits. For a third of states, the average premiums rose 20% or more.
Yesterday, in its budget and economic outlook for the next decade, the Congressional Budget Office substantially changed its short-term Affordable Care Act estimates in ways that show the law is performing far worse than expected. CBO’s new projection of 13 million exchange enrollees in 2016 is nearly 40% below previous expectations. CBO’s also projects that the average subsidy per enrollee in 2016 will increase by about 18% relative to its March 2015 ACA estimate—an indication that enrollees are both less healthy and poorer than the agency originally projected.