We are only months away from the full implementation of Obamacare, especially the new health insurance exchanges. Between today and January 2014 there are forces coming together that will create the perfect storm for health care costs, and your premiums both short and long-term.
On these pages you have or will see more detail on each of the following, but for now here are the issues that will come together to make Obamacare more costly and in the process disrupt health care and health insurance for millions of Americans.
1. During 2012 HHS delayed the scheduled cuts to Medicare Advantage Plans and offset those cuts that were implemented by going beyond the law in making bonus payments to more plans and awarding bonuses to plans whose performance was less than the required standard. During the last several years HHS has been trumpeting the lower costs for these plans and the growing enrollment. Beginning in 2013 all bets are off as the real cuts hit and are likely to cause higher premiums and lower benefits.
2. In response to cost pressures caused by Obamacare, there is growing consolidation in the health care industry. Hospitals are merging and buying physician groups. The push for Accountable Care Organizations is also encouraging consolidation among providers. At the same time the health insurance exchanges are encouraging more “competition” among insurance companies in the belief this will lower costs. In reality, we are shifting the balance of power to health care providers. Because providers are consolidating, and more insurers are being encouraged to participating in a given area thereby diluting their bargaining leverage, we are shifting the negotiating power for fees from insurers to hospitals and doctors, exactly the wrong strategy to control costs.
3. In the belief they can lower their costs with a no pain strategy, more and more employers, especially small employers are shifting to self-insurance in a quest to avoid some Obamacare mandates. This strategy is short-sighted and risky for small employers with no chance to actually save money. When reality hits it will cause another round of major changes either back to an insured model, trimming benefits or dropping coverage in favor of allowing employees to enter a health insurance exchange.
4. The definition of “affordable” employer based health insurance has created a disadvantage for many workers with such coverage. By basing the definition of affordable coverage on an employee contribution for single coverage up to 9.5% of the employees W-2 earnings and ignoring the cost of family coverage, many workers will pay considerably more for their employer coverage than they would otherwise pay after receiving a tax credit in a health insurance exchange. This will create pressure on employers to find ways to allow workers into exchanges thereby raising the cost of Obamacare.
Every change caused by health care reform has long and short-term implications and many unintended consequences. While out-of-pocket costs have been lowered for some Americans, these savings are offset by changes that require higher premiums for everyone with insurance. Since enactment of the law there have been many regulatory and policy decisions that have also set the stage for higher costs and counterproductive incentives that will have a negative impact on the federal government.
- Will your employer based health care coverage be “affordable” under Obamacare? Are workers getting a fair deal when prevented from enrolling through a health insurance exchange … The infamous 9.5% (quinnscommentary.com)
- What tax credits will be provided by the Obamacare health insurance exchanges (quinnscommentary.com)