“ObamaCare creates incentives for state and federal politicians and bureaucrats to exert direct control over the premiums of health plans. However, because health plans largely pass through costs from medical providers, artificially limiting increases in premiums cannot actually result in lower health costs. Instead, it results in reduced access to care and threatens the solvency of health plans. ObamaCare also introduces at least five critical uncertainties that make it difficult to estimate future medical costs accurately, and suggest that Obamacare will be much more disruptive to health insurance than the Administration has advertised.”
“Another unintended consequence of President Barack Obama’s health care law has emerged: Older adults of the same age and income with similar medical histories could pay widely different amounts for private health insurance due to a quirk of the complex legislation. Those differences could be substantial. A 62-year-old could end up paying $1,200 a year more than his neighbor, in one example. And experts say the disparities among married couples would be much larger.”
“The furor says less about McKinsey than about the politically damaging reality of the new law. As the McKinsey survey shows in detail, many businesses may be better off if they drop coverage and pay workers slightly more to compensate for fewer benefits, along with paying the new penalty for not providing insurance. Many workers earning up to $102,000 may also be better off because the ObamaCare subsidies are so much larger than the current tax break for employer coverage.”
“In addition to being transparently political, these provisions have negative practical implications. For example, the proposed rule setting an arbitrary 10 percent price-increase threshold could cause insurers to target rate increases to just below the limit. Indeed, it is a well-documented effect of price controls that sellers respond to the imposition of price ‘ceilings’ by turning them into price ‘floors.’ The less competitive the market on which price controls are imposed, the sooner that phenomenon occurs.”
“The argument for insurance exchanges is relatively simple. By setting up Web sites where consumers and small businesses can easily compare insurance options (including quality, price and coverage), states will spark competition, driving insurers to offer more affordable plans to consumers. The health law, however, takes this simple idea and makes it extraordinarily complicated — if not impossible — to execute. By adding a litany of new minimum-insurance requirements and regulations to the original bipartisan idea, health insurance purchased through an exchange will likely end up more expensive than it is now.”
“One of the main criticisms of Obamacare is that it will significantly reduce the incentive for small businesses to hire — especially once the premium subsidies become available in 2014… But the actual implementation will be complex, thanks to an odd retroactive feature.”
“The incentives built into the legislation are pretty straightforward: Employers who don’t offer coverage will have to pay a penalty. But the penalty in many cases will be far less than the cost of coverage. So even with the penalty, they’ll be able to shift employees into the subsidized exchanges, save money, and perhaps even give their employees a raise as they do. As Credit Suisse’s response says, ‘While the figures are staggering, they are simply an economically-rational response by employers to federal health policy to shift the U.S. from an employer-purchased to an individually-purchased insurance market.'”
“Despite advice from most free-market analysis, some Republican governors are executing the Patient Protection and Affordable Care Act (PPACA) by establishing Health Benefits Exchanges. These governors dislike PPACA, but they believe that exchanges can be vehicles for more choice than the federal law anticipates.
But I think that the real news is how much difficulty states that want to implement PPACA as fast as possible are having. “
“Now, with 50 uncompetitive state markets and new federal regulations on what is or isn’t an acceptable insurance plan on top of existing state laws, there will actually be less room for price-cutting competition in health care. You can expect insurance costs to rise as a direct result.”
“One of the key components of ObamaCare, tax subsidies to purchase federally approved health insurance, will substantially increase the number of people who are not paying for government services and thus have a lower incentive to be concerned about record-breaking government spending. These tax subsidies, which take effect in 2014, will also harm the economy by increasing the national deficit and by creating huge marginal tax rates that will discourage productivity for many households. Obamacare’s tax subsidies are one of the primary reasons to repeal Obamacare.”