Unlike the double-digit percentage rate hikes individuals purchasing coverage under the Affordable Care Act will see next year, those with coverage at large employers will face single-digit increases, a new national survey of large employers shows.
The National Business Group on Health said Tuesday the percentage increase large companies will see next year is similar to 5% cost increases employers have experienced for five years.
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With the failure of Republicans’ health care effort, some Senate moderates are looking to prop Obamacare up with additional taxpayer funds. There’s a case to be made for a short-term bailout of Obamacare—but only if it’s accompanied by serious reforms that liberate consumers from the law’s rising health insurance premiums.
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The repeal and replace effort has failed for now. Republicans will move on to tax reform. It remains to be seen what they accomplish in an effort that is arguably at least as complicated as health reform. Ironically, Senator John McCain, the man whose thumbs down deep-sixed the frantic effort to find a way to get something resembling Obamacare repeal passed in the Senate, long ago offered one of the boldest proposals I have seen in my lifetime as it relates to both health reform and tax reform.
Senator McCain proposed to completely eliminate the tax exclusion for employer-provided health coverage (rather than merely capping it–a half measure designed to mitigate rather than eliminate the distortions caused by the exclusion while doing nearly nothing about its unfairness). As detailed in this Heritage report: His plan “would replace the special tax breaks for employer-based health insurance with a universal system of health care tax credits for the purchase of health insurance.
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President Donald Trump has recently twhreatened (that’s a threat communicated via Twitter) to stop payments of billions of dollars out of the federal treasury that have been going to insurance companies selling health insurance policies on the Exchanges created by the Affordable Care Act. Indeed, rumors are circulating that he may order a stop as early as tomorrow (August 1, 2017). Whether he does so this week, next week or next month, President Trump will be perfectly within his rights in stopping these illegal payments. It doesn’t matter whether these payments are “a good idea” or not or whether they actually save the federal government money.
In Part 1, we learned that real per capita health spending saw a 25-fold increase the 8 decades starting in 1929 even as real per capita GDP grew only 5-fold during the same period.
Whereas the previous post looked at cost trends in broad 20-year snapshots, today’s post looks at that extraordinary growth in health spending in much finer annual-level detail. Looking at real per growth has the advantage of removing general inflation so that we get a clearer picture of what’s going on, as well as telling us what is happening to the average U.S. resident.
With that in mind, I examined the difference in annual growth rates for real per capita health spending vs. all real non-health GDP per capita over the full period for which such data are available: 1929 to 2015. Doing the comparison in this fashion has the advantage of not letting the health sector’s ever-increasing size distort our picture of how much the rest of the economy is growing.
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With Republican repeal-and-replace efforts temporarily sidelined, now is a good time to step back and take a big picture view of exactly how we got into the mess we are now in regarding health care. What should be clear to people of all political persuasions is that Obamacare did not solve America’s health care woes.
If we take a long-term view (i.e., remembering that 90% of the nation’s population was uninsured back in 1940), the law has modestly reduced the number of uninsured. Most other promises made for the law were broken, most notably that a) if you like your plan, you can keep your plan (PolitiFact’s 2013 Lie of the Year); b) the law would lower premiums for the average family by $2,500 per year; c) the law would not add one dime to the deficit; and d) there would be no new taxes on the middle class. The jury is still out on another huge promise, but at this point I see no overwhelming evidence that the law has bent the cost curve as promised.
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The federal share of national health spending grew by about one-eighth between 2008 and 2016 and by the year 2025 is projected to have increased by nearly one-fifth. By 2025, federal, state and local taxpayers will be financing fully two-thirds of American health care . Some might say “not bad for government work.”
Careful readers might also note that the state and local government share of national health spending shrank slightly during the same period–a reflection of President Obama’s vision to give Uncle Sam a bigger role in health care, displacing decisions formerly made by stat and local governments and the private sector in the process.
Recriminations are already underway – at the White House, on Capitol Hill, in the news media. They are debating whose fault it is that Senate Republicans can’t pass a health care bill. Was it the fault of Mitch McConnell? Or Mike Lee? Or the half dozen other senators who balked?
In order to successfully pass a health reform bill, Republicans must do something they so far haven’t done. They must go on TV and explain how reform of Obamacare is going to solve real problems real people face. If they can’t do that, they will never have the support of the general public. Without that, Congress will never have the courage to enact major reforms.
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Arguably the most significant data point in the entire debate about the Senate health care bill has been the CBO’s claim that in 2026, 22 million fewer people would have health insurance under the Senate bill than under Obamacare.
Democrats have seized on this number to stoke fears about the bill’s impact; moderate Republicans, intimidated by the negative headlines, have been reluctant to support the bill.
But buried within the CBO’s reports is a key fact: the vast majority of those coverage “losses” occur because the GOP bills repeal Obamacare’s individual mandate. In its July 20 estimate of the most recent version of the Senate’s Better Care Reconciliation Act, or BCRA, CBO says that in 2018, 15 million fewer Americans will have health insurance under the bill, two years before its repeal of Obamacare’s insurance subsidies takes effect.
Why? It’s “primarily because the penalty for not having insurance would be eliminated.”
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In the 1990s, there was plenty of teeth-gnashing by welfare reform opponents over changing the funding structure for cash assistance, implementing work requirements, and creating time limits – rhetoric that sounds eerily similar to much of the health reform coverage today.
Mostly absent from the welfare discussion was the role that earned income tax credits (EITC) would play in reform. Similarly, in the current health care debates over Medicaid changes there is a lack of any reference to proposed tax credits.
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