The implementation of major legislation such as the Affordable Care Act (ACA) often results in fiscal outcomes that differ significantly from prior projections. Whenever this happens it leads to many questions, much confusion, and several claims and counter-claims. Rarely is it immediately clear whether the law is working differently than envisioned, or whether the unexpected outcomes are due to inevitable projection errors having nothing to do with the law.
On rare occasion, however, a prior projection proves so far off that its significance must be noted. Two weeks ago my colleague Brian Blase uncovered such a development with respect to the ACA’s Medicaid expansion. Recall that the ACA considerably expanded Medicaid eligibility – an expansion made optional for the states in a later Supreme Court ruling. It turns out that the 2015 per-capita cost of this Medicaid expansion is a whopping 49% higher than projections made just one year before.
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In a Health Affairs article, Loren Adler and Paul Ginsburg from the Center for Health Policy at the Brookings Institution make the claim that Obamacare has lowered health insurance premiums. Adler and Ginsburg claim that, in 2014, premiums for the second-lowest cost “silver” plan were “between 10 and 21% lower than average individual market premiums in 2013,” the year before Obamacare went into effect. Yet the Government Accountability Office has found that, in early 2013, the median plan in the median state for a healthy 30-year-old man had an annual premium of just $1,558. By comparison, according to the Kaiser Health Calculator, the nationwide average annual premium for the second-lowest cost “silver” plan for a 30-year-old man is now $3,186—more than twice as much.
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Aetna Inc, the nation’s third largest health insurer, said on Tuesday that it no longer plans to expand its Obamacare business next year. The insurer, which is losing money on the plans it sells in 15 states to individuals on exchanges created under the Affordable Care Act, said it also was looking at whether it should continue to offer the contracts. Aetna said its exchange-based plans for individuals had a pretax operating loss of $200 million in the second quarter, and it projected the loss from that business would exceed $300 million by year-end. It had initially expected to break even on the plans.
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Health plans sold on Michigan’s insurance exchange could see an average 17.3% increase next year, and if recent history is any guide, state regulators could approve the insurance companies’ rate hike requests without many — if any — changes.
The rate increases would mean a financial hit for taxpayers in general and the 345,000 Michiganders who buy their health insurance on the Healthcare.gov exchange, created under the Affordable Care Act, also known as Obamacare.
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A sampling of the 2017 proposed rate increases:
Blue Care Network of Michigan is seeking an average 14.8% rate increase for its plans.
Blue Cross Blue Shield wants an 18.7% increase.
Priority Health has asked for a 13.9% rate hike.
The biggest rate request is from Humana — a 39.2% rise.
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Former adviser to the president for health policy explains why he was wrong about how the change in the delivery of health care would, and should, happen: “I believed then that the consolidation of doctors into larger physician groups was inevitable and desirable under the ACA. . . . I still believe that organizing medicine into networks that can share information, coordinate care for patients and manage risk is critical for delivering higher-quality care, generating cost savings and improving the experience for patients. What I know now, though, is that having every provider in health care “owned” by a single organization is more likely to be a barrier to better care.”
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The Kaiser Family Foundation’s most recent Employer Health Benefits Survey found that among firms with 50 or more full-time-equivalent workers (i.e., the one’s subject to Obamacare’s employer mandate):
“four percent of these firms reported changing some job classifications from full-time to part-time so employees in those jobs would not be eligible for health benefits”
“four percent of these firms reported that they reduced the number of employees they intended to hire because of the cost of providing health benefits” . , and 10% of firms reported doing just the opposite and converting part-time jobs to full-time jobs”
This is unequivocal empirical evidence that Obamacare has had some of the adverse effects on employment predicted for years by Obamacare critics: a shift towards part-time work and even a reduction in hiring. But according to the same survey, the latter impact was offset due to the 10% of employers who converted part-time jobs to full-time jobs in order to make them eligible for health benefits.
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Small businesses have been pumping the brakes on offering health benefits to their employees since 2009, according to new data from the Employee Benefit Research Institute.
“The fact is that small employers were less likely to offer these benefits to begin with,” Paul Fronstin, EBRI’s director of health research and education program and author of the report, told Bloomberg BNA July 28. “While the ACA was designed to try to get more small employers to” offer health insurance, “it hasn’t.”
The proportion of employers offering health benefits fell between 2008 and 2015 for all three categories of small employer, EBRI found: by 36 percent for those with fewer than 10 employees, by 26 percent for those with 10 to 24 workers and by 10 percent for those with 25 to 99 workers.
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Democratic and Republican governors know that rising health care costs are increasingly restricting spending on other state priorities. Paul Howard, Director of Health Policy at the Manhattan Institute, outlines five strategies that innovative governors can use to help transform state health care markets: 1. Incorporate reference pricing for common procedures and tests into state benefit designs, 2. Ban anti-tiering provisions, 3. Drive price transparency by setting up an all-payer claims database, 4. Expand access to direct primary care, and 5. Repeal regulations that hamstring competition, such as certificate of need laws and prohibitions on the corporate practice of medicine.
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Even progressives are turning against Obamacare as health care costs and premiums skyrocket.
Neera Tanden, president of the Center for American Progress, said Wednesday there was strong support for a single-payer system on the Democratic platform committee, and one reason is that progressives blame the Affordable Care Act for rising costs.
“In a world in which people are facing rising costs and they kind of hear the ACA is over here, they’re blaming the ACA for their rising costs,” Ms. Tanden said during a panel discussion at the Democratic National Convention.
“Even progressives who fought for the ACA five years ago are really questioning the affordability issue, and it’s making them move in really dramatic ways,” she said. “Part of this lack of support of the ACA is from the left, not just the right.”
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