When Affordable Health Care Died

The grim tale of what ObamaCare will really cost.

BArnold Ahlert · March 28, 2013, Published in The Patriot Post

On Tuesday, Health and Human Services Secretary Kathleen Sebelius was forced to concede that some people who will be buying health insurance for themselves next fall will face higher premium costs due to provisions in the healthcare bill. A new study released the same day reveals that insurance companies themselves will be paying out an average of 32 percent more for medical claims. Both stories join the growing list of indicators that point toward a grim reality: when it is fully implemented, the Affordable Healthcare Act of 2010 will be anything but.

Sebelius tried to put a happy face on the ongoing debacle better known as Obamacare, claiming that people who have minimal plans they can afford will be better served by the more expensive, but more generous, plans. “These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market,” she said. “But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that they’re spending.”

In other words, not only will premiums be going up, but taxpayer-underwritten subsidies will be as well — meaning many Americans will be soaked twice.

Furthermore, Barack Obama’s oft-stated contention that Americans who already have health insurance can keep the policy they have now joins a rather large list of lies this president has promoted to advance his agenda.

Yet Sebelius insisted that when the new online marketplaces for buying insurance become operational, competition will drive down the price. “As a former insurance commissioner I have watched what transparency does to a market,” Sebelius said. “This is the first time ever in the history of the United States that insurance companies have to file their rates, it has to be very transparent, they have to offer the same kind of coverage without 5,000 tiny little lines and internal caps, and they have to compete for customers,” she contended. “And I am a believer in the market strategies that in and of itself will minimize the rate impact.”

Sebelius’s faith in market strategies is belied by a more daunting reality. While competition may mitigate price increases,  in 2014 insurance companies will be forced to cover people with pre-existing conditions. Thus, as the aforementioned study by the Society of Actuaries explains, sicker people will be joining the pool of those insured, driving up costs. “Claims cost is the most important driver of health care premiums,” said Kristi Bohn, an actuary who worked on the study.

The Obama administration attempted to counter that argument with the claim that the study focused on “only one piece of the puzzle” and ignored “cost relief strategies,” including tax credits aimed at helping people afford insurance, as well as “special payments” that will be granted to insurers who cover a larger number of sick people. At the White House briefing Tuesday, Sebelius also claimed that comparing the marginal plans people currently have, to more comprehensive plans available under the new law, isn’t fair. “Some of these folks have very high catastrophic plans that don’t pay for anything unless you get hit by a bus,” she said. “They’re really mortgage protection, not health insurance.”

The report does indeed focus on one piece of the puzzle, namely on those people who buy insurance directly from insurance companies. And while it notes that the cost of medical claims per person in some states will decline, “the overwhelming majority will see double-digit increases in their individual health insurance markets.” The report further notes that due to differing population and insurance rules, some states will be slammed far harder than others. By 2017, the estimated increases would range from a low end of more than 20 percent for Florida, moving up to 62 percent in California, 67 percent for Maryland, and reaching a whopping 80 percent in Ohio and Wisconsin.

On the bright side, the report estimates that states such as New York and Massachusetts will see double digit declines in costs for claims in the individual market, and that 32 million more Americans will have healthcare insurance.

The report did not do estimates for employer plans, because Obamacare is focused on helping people who don’t have coverage through their workplace.

Unfortunately, the CBO’s latest estimate of people who will be pushed out of employer provided insurance coverage has more than doubled to seven million Americans. Those seven million Americans formerly covered by their employer will also make a mockery of the president’s promise about keeping the insurance one already has.

Some of those employers are crying foul as well. The US Chamber of Commerce is appealing to the Obama administration to give special relief to businesses in states that have refused to expand Medicaid. Obamacare had mandated that states expand the federally funded health insurance plan for the poor and disabled, but the Supreme Court ruled that aspect of the bill unconstitutional. Fourteen states have opted out, meaning employers will either have to underwrite insurance for low-wage workers, or face a $3000 fine for each employee who enrolls in a state exchange program.

The Chamber of Commerce points out that the administration is exempting poor people in those same states from the individual mandate that requires them to buy insurance or face a fine. “If an employer penalty is only triggered by a would-be Medicaid eligible employee, that trigger should be exempted or excused,” the Chamber of Commerce said.

A study by Jackson Hewitt Tax Service reveals why. “The associated costs to employers could total $876 million to $1.3 billion each year in the 22 states that have opposed, are leaning against, or remain undecided about expanding Medicaid,” it states. If the administration grants this exemption, the taxpayers will once again pick up the tab — which is likely cheaper than the tab taxpayers will be saddled with if more states opt in on expanding Medicaid enrollees.

As for insurance companies themselves, they estimate that premiums will “increase sharply” beginning next year with the nation’s largest carrier, UnitedHealth Group Inc., predicting that rates for consumers buying their own plans could increase by as much as 116 percent. Small business rates could go up as much as 25-50 percent as well. Insurers are “not being shy that premiums are going to increase in 2014,” and are urging brokers to “brace our clients,” said John Lacy, vice president of group benefits at Bouchard Insurance, a brokerage in Clearwater, FL.

Furthermore, the CBO has another headache for the Obama administration. The latest revision of the ten year cost estimate for Obamacare is now $1.6 trillion, nearly double the $898 billion the CBO estimated those costs to be in 2010. Thus, yet another promise made by the president, that the healthcare bill would be “deficit neutral,” is revealed as fraudulent.

Actually, even the initial CBO estimate was fraudulent. It was made for the years 2010-2019, but the bill isn’t fully implemented until 2014. In other words ten years of taxes were raised to pay for only six years of expenditures. As bad as that is, the most daunting prediction made by the CBO is this: despite the huge costs of this new entitlement, the number of “uninsured non elderly people” will still total 30 million in 2023.

And then there’s the tax component. The Joint Committee on Taxation issued a report noting that the 21 tax increases associated with the bill are now nearly twice the original estimate made in 2010, rising from $569 billion to $1.058 trillion by the summer of 2012.

Former New York lieutenant governor Betsy McCaughey, one of a handful of Americans who, unlike congressional Democrats, actually read all 2,572 pages of healthcare act, reveals a number of additional costs contained in the bill. The reason more than 7 million employees are likely to lose employer coverage is because the bill “is so expensive, it adds $1.79 per hour to the cost of a full-time employee,” she writes. This will push employers in retail and fast-food industries who currently pay half that amount into putting many of their workers on part-time hours. (One is left to wonder whether the lost wages of hardworking Americans are ever added to CBO cost estimates.)

She further notes that the law includes “half a trillion dollars in tax hikes, including a new 3.8 percent tax on gains from selling any asset, including your home, small business, stocks or bonds,” and that administrative costs to implement the bill “will soar from $29 billion when President Obama was first elected to $71 billion by 2020, some $40 billion dollars a year more in bureaucracy.” That amount of money McCaughey reveals is enough “to buy private health plans for fully half of all Americans who are now uninsured because they can’t afford it.”

Which bring us to one final cost — and another broken promise — namely that Obamacare will cut the cost of premiums by $2,500 a year. According to the IRS the least expensive government-sanctioned health care plan for the typical family of two adults and two or three children will be $20,000.

From now until November 2014, it behooves Republicans to remind Americans, who will have had firsthand experience with the full effects of the bill for several months leading up to the mid-term election, exactly what was promised — and exactly what was delivered. It may be the electorate’s last chance to save themselves from this debacle, even if it means saving the Republican Party in the process. Republicans don’t deserve such salvation, but if the public can be made to truly understand what the real costs of Obamacare are, they may save Republicans — in order to save themselves.

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