Surprise! ObamaCare doesn’t lower health-insurance costs
posted at 9:25 am on September 30, 2011 by Ed Morrissey
Barack Obama promised that his health-care overhaul plan would “bend the cost curve downward” and help Americans get better health care for less money. How is that promise working out so far? According to the non-partisan Kaiser Family Foundation … not well (via The Weekly Standard):
The Kaiser Family Foundation shows family premiums topped $15,000 a year for the first time in 2011, increasing a whopping 9% this year, three times more than the increase the year before. The study says that up to 2% of that increase is because of the health care law’s provisions, such as allowing families to add grown children up to 26 years old to their policies.
So what about that $2,500 in savings the president pledged? White House deputy chief of staff Nancy-Ann DeParle insists families will see that savings — by 2019.
“Many of the changes in the Affordable Care Act are starting this year, and in succeeding years,” DeParle told ABC News, “and by 2019 we estimate that the average family will save around $2,000.”
DeParle said that the “big increases that occurred last year were probably driven by insurance plans overestimating what the impact would be and maybe trying to take some profits upfront before some of the changes in the Affordable Care Act occur.
Probably? Maybe? If you get the impression that no one at the White House knows what’s going on, well, you’re right. That was clear enough when the bill got introduced in the summer of 2009 and then extensively debated that the Obama administration had confused costs with prices. The entire bill consists of attempts at price control while ignoring the real causes of rising prices, which are innovation (better care) and a lack of price signals to consumers through the third-party-payer model — a model that ObamaCare amplified rather than reformed.
Instead of lowering costs, insurance premiums increased at triple the rate from the previous year. Why? Thanks to new federal mandates, actual costs will increase for insurers, who now cannot offer lower-coverage and lower-cost plans to people who don’t need so-called Cadillac plans for their current situations. Adding mandates increases costs, especially the mandates to provide coverage for pre-existing conditions and “community pricing” that requires everyone else to pay more to cover that risk. Anyone with a modicum of knowledge about risk-pool behavior — or just plain common sense — could see that outcome two years ago.
Employers are now shifting more of the increased costs to employees, too:
The Kaiser study also indicates employers are switching plans and shifting costs onto employees. Half of workers in smaller firms now face “deductibles of at least $1,000, including 28 percent facing deductibles of $2,000 or more,” according to the study.
That’s actually not a bad way to get pricing signals to the consumer, although it should be done in conjunction with HSAs and hospitalization-only coverage. Unfortunately, ObamaCare obliterates the tandem of HSAs and catastrophic-only coverage, which would put consumers in charge of cost control and lower premiums to a reasonable enough level that employers could get out of the loop. Small businesses have to do this in order to survive, and it won’t be long before larger firms do the same.
For the past two years, ObamaCare critics have repeatedly predicted this outcome. If the White House now can only provide guesswork as to why premiums are escalating faster than ever, it proves their incompetence at being the architects of a national controlled economy, and the folly of that venture at all.