Andrea Tantaros
Friday, September 30th 2011, 4:00 AM
Someone call the doctor. The side effects of President Obama's Affordable Care Act are becoming apparent, and so is the irony. This week, nonprofit research group The Kaiser Family Foundation found that, despite the title, "affordable" health care premiums have risen steeply under the law - with the annual premium for family coverage through an employer reaching $15,073 in 2011, an increase of 9% over the previous year. Or as Politico put it: Premiums are now costing families as much as a new car.
This wasn't supposed to happen. Remember, the real reason for ramming the bill through Congress was to bring costs down. In fact, the White House is still claiming the law will lower premiums.
From their website: "The Affordable Care Act will bring down costs, improve the quality of health care delivered to all Americans and expand coverage to 32 million Americans." It continues, "Independent experts have found that the new law helps reduce costs for families and businesses, cuts the deficit and strengthens Medicare, adding years to the trust fund while maintaining seniors guaranteed benefits."
While that was the hope, it's surely not the reality, at least not yet. Not to mention the fact that the law also cut $500 billion from Medicare, hardly what I'd call "strengthening" it.
So what explains the spike in prices?
First, there are costly provisions of Obamacare that have already taken effect, even though the exchanges - the core of the bill, and the key mechanism supporters insist will drive down costs - don't come into play until 2014. Some of these include covering kids 26 years old and under, accepting patients with no preconditions and eliminating annual caps.
While these sound like good moves, there were better approaches if Obama wanted to tame rising prices. Opening up insurance purchasing over state lines would have solved the above problems.
Back in May, Health and Human Services Secretary Kathleen Sebelius issued a final rule that would allow the administration to "establish procedures for federal and state insurance experts to scrutinize premiums" starting in September of this year. Managed care companies were told they would have to justify any rate increases above 10%. Translation: They'd be put on the political hot seat.
Because the power to implement price controls didn't make it into the final legislation, the administration needed some way to butt its head into private business to control costs. The Sebelius rule allows HHS to call out any insurance agency and ask for its paperwork.
The Kaiser study showed that premium increases came in at 9% since the passage of Obamacare, just under 10%. What a coincidence!
Insurers pushed up costs, not only to cover anticipating an influx of new and possibly sick patience (and lack of revenue from healthy patients signing up), but also to avoid getting audited by the Obama administration before the review period kicks in.
All this will have a direct effect on quality of care. If insurers are mandated to cover patients regardless of preconditions and not enough healthy people sign up for the exchanges, they'll have to cut services to make a profit, hurting quality and access.
So premiums are going up in a down economy, despite what the White House claims. This is bad news for businesses, as many won't be able to afford to cover you or your co-workers, which means the President's claim you can keep your doctor will likely prove false.
According to a survey by McKinsey & Co, a stunning 30% of companies said they would drop employee health coverage once the taxpayer-subsidized health insurance exchanges from Obamacare start in 2014. That means whether you like your doctor or not, you may be forced into the exchanges.
As former Democratic National Committee Chairman Howard Dean said in response to the survey: "Most small businesses are not going to be in the health insurance business anymore after this thing goes into effect… That's going to be the biggest boost to small business that has been done in years and years and years."
Not quite: This means that most of the cost of private insurance will be moved onto the public balance sheet, making the cost of Obamacare even greater, and leaving the taxpayer - including many of those small business owners and job creators - stuck with the bill.
Though the President has claimed that Obamacare would bring down costs, grow jobs and help maintain the best care possible by expanding access, its consequences are turning out to be far less rosy. Our best hope is the Supreme Court ruling that the individual mandate is unconstitutional. Without that glue, the entire bill falls apart and they'll have to scrap it and start over. It's our best and only prescription for real reform.
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