ObamaCare’s impact on health costs.
The less-explored question involves why Obamacare’s overall combination of taxpayer subsidies, expanded insurance programs, health benefits requirements, AND coverage mandates had so much less of an effect than the law’s architects envisioned.
It turns out that many of the nominally uninsured still have other alternatives to health care than just through heavily-subsidized Medicaid and exchange-based insurance. You might call such uncompensated care either an option for “implicit insurance” or a hidden tax on acquiring more formal coverage.
Health policy researchers Amy Finkelstein, Neale Mahonem and Matthew Nolowidigdo unravel the puzzle in a recent National Bureau of Economic Research paper. They explain why there is less “demand” than expected for the increased “supply” of subsidized coverage for lower income individuals and more limited take up of subsidized coverage than once predicted.
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Oregon approved taxes on hospitals, health insurers and managed care companies in an unusual special election Tuesday that asked voters — and not lawmakers — how to pay for Medicaid costs that now include coverage of hundreds of thousands of low-income residents added to the program’s rolls under the Affordable Care Act.
Measure 101 was passing handily in early returns Tuesday night. The single-issue election drew national attention to this progressive state, which aggressively expanded its Medicaid rolls under President Barack Obama’s health care reforms. Oregon now has one of the lowest rates of uninsured residents in the nation at 5 percent. About 1 million Oregonians — 25 percent — now receive health care coverage from Medicaid.
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When the authors of the Affordable Care Act promised to “bend the cost curve” in health care, it was typical Washington doublespeak. Voters likely heard those words as a promise that costs would go down, but the intended meaning was merely that they would rise more slowly than before.
Yet even by that meager standard, ObamaCare is a failure. Costs are rising faster than before, and there’s no real prospect of a reversal. The key provisions of the law that were supposed to produce savings and efficiencies either haven’t worked or will never be implemented.
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This study analyzes the 2018 premium increases for health insurance plans offered on the Affordable Care Act’s individual marketplaces. Specifically, it compares the 2018 premiums to the 2017 premiums by analyzing the cost changes in three different plan types by rating area: benchmark Silver, lowest-cost Bronze, and lowest-cost Gold plans. It finds:
- Benchmark plans from 2017 that are still offered in 2018, even if not as the benchmark, rose by an average of 29 percent—the highest average increase since the ACA began;
- Only 17 percent of all rating areas have the same benchmark plan as 2017;
- The average 2018 benchmark plan premium is 36 percent higher than the average 2017 benchmark plan; and
- The lowest-cost Bronze premium and the lowest-cost Gold premium both increased on average by about by 20 percent.
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- In absolute terms, the average worker in 2016 had to work 63 days a year just to cover his/her own health costs .
- In relative terms, the average American worker in 2016 must work 9 times as long to cover average health spending costs as his or her counterpart in 1940 .
- In comparative terms, the average American worker in 2016 must devote roughly twice as many work hours to cover health spending costs as to cover average food costs.
This year’s debate over trying to repeal, replace, or just rename Obamacare often recycled the well-worn nostrums concerning private health insurance arrangements. Among them:
■ A large majority of health care spending involves a much smaller, less healthy portion of the insured population, which means that the distribution of health care spending is highly concentrated.
■ Most individuals are healthy and need to spend very little on health care each year.
■ Sustainable health insurance markets require that healthy customers pay more than they want so that less healthy customers can pay less for the care they need.
■ Extensive government intervention, such as standardized benefits, generous subsidies, and limits on risk-based underwriting, is necessary in health care markets because those markets are prone to adverse selection and dangerous “death spirals.”
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Meg and Robert Holub were surprised to receive a letter last week welcoming them to a new health insurance plan and telling them to pay $3,483 by Jan. 8.
“We have received your application for individual and family coverage effective 1/1/2018,” the letter said. The only problem: They never applied for the coverage, did not want it and could not afford it.
“I worried, did someone hack my account to sign me up for this?” Mr. Holub said. “And I wondered, what are the implications if I don’t pay for this plan? Will I be hounded by a credit agency?”
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As small business owners learn what their 2018 health insurance costs will be, some are considering providing different types of coverage for their employees.
Companies are receiving notices of premium and coverage changes for 2018. The changes vary, depending on factors including the state where a company is located, how many employees it has and how comprehensive its insurance is. But many owners are seeing rate increases of double-digit percentages, finding dramatically reduced coverage, or both. Health insurance consultants expect more owners to rethink their strategies beyond 2018 and choose alternatives like paying for claims themselves or adding health services that can lower costs.
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Since 2011, the U.S. Census Bureau has reported on a new, more comprehensive Supplemental Poverty Measure (SPM) that accounts for various safety net programs. The new measure takes into account the hundreds of billions of dollars provided to the needy—including food stamps and cash assistance programs—and makes adjustments for major expenses such as out-of-pocket medical spending, income, and taxes. According to the new measure, out-of-pocket health spending alone added 10.5 million people to the ranks of the poor in 2016 .
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The policy proposition of the Affordable Care Act was to increase the number of people with health insurance by expanding government programs and subsidizing private insurance premiums. It did so by expanding eligibility for government insurance programs and regulatory authority over U.S. health care via new mandates, regulations, and taxes. The two major elements of the law—a significant Medicaid expansion for non-disabled adults and subsidies for exchange-based private insurance—will each be funded with almost $1 trillion of taxpayer money over a decade, according to a January 2017 CBO analysis.
The harmful effects of this ill-conceived approach are now well documented: Insurance premiums have skyrocketed; many insurers have withdrawn from the state marketplaces; and for those with coverage, doctor and hospital choices have narrowed dramatically. The ACA will also undoubtedly accelerate the development of the kind of two-tiered health care system characteristic of other nationalized systems, where people with money or power are able to circumvent the substandard government systems that the lower classes must endure. The result will be an end to the superior access, broad freedom of choice, and exceptional quality of care that distinguishes American health care from the centralized systems that are failing the world over.
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