April 29, 2014

The Obamacare Debate Isn’t Over

At press conferences on April 1 and 17, President Obama declared the debate on the health care law “over.” The White House can prematurely celebrate its questionable count of eight million sign-ups, but the end of the federal exchange’s open enrollment period doesn’t mean the Obamacare debate is over. The President says Democrats should “forcefully defend and be proud” of the law. But Americans are experiencing the pain of the president’s health care law. Democrats know this; otherwise they wouldn’t have unilaterally delayed or changed parts of the health care law more than 20 times.

Premiums Expected to Rise in 2015

Insurance companies are already calculating premium rates for their 2015 exchange plans. Initial indications are that people should expect to see higher premiums and higher out-of-pocket costs next year. An April 7 Morgan Stanley survey of insurance brokers found Americans faced the “largest acceleration in small and individual group rates in any of the 12 prior quarterly periods.” 

Health Insurance Market Prices Soar

Price increases by quarter for renewing health plans

Health Insurance Market Prices Soar

Data source: Morgan Stanley survey of insurance brokers

The survey found that the small group market growth rate had already leapt from three percent in September of 2013 to more than six percent in December 2013. Over the subsequent three-month period, premium growth rates doubled again to the current average increase of 12 percent. In the individual market, the survey calculated a two percent growth rate in September 2013; but by December, that number had spiked to nine percent. Over the subsequent three-month period, premium growth rates rose again to the current average of 11 percent. The Morgan Stanley survey results show that Obamacare’s insurance market changes drive health care premiums up –in some cases by substantial amounts. Ten states seeing the most extreme average individual market rate increases from 2013 to 2014 are:

  • Delaware – 100 percent
  • New Hampshire – 90 percent
  • Indiana – 54 percent
  • California – 53 percent
  • Connecticut – 45 percent
  • Michigan – 36 percent
  • Florida – 37 percent
  • Georgia – 29 percent
  • Kentucky – 29 percent
  • Pennsylvania – 28 percent

Obamacare Taxes Drive Premiums Even Higher

Independent experts agree the health care law’s litany of taxes and fees lead to increased premium costs. On April 11, 2014, the American Action Forum released an updated analysis calculating that, due to seven specific Obamacare taxes, people who buy health coverage on the exchanges will pay $354 more per person annually. People who have employer-sponsored insurance can expect these taxes will increase their annual premium by $196 per person. Key taxes include:

  • Health Insurance Tax. The Joint Committee on Taxation (JCT) calculated in June 2011 that a large part of the $101.7 billion insurance tax will “be passed forward to purchasers of insurance in the form of higher premiums.” JCT said that repealing this tax “could decrease the average family premium in 2016 by $350 to $400.”
  • Medical Device Tax. CBO, JCT, and the CMS chief actuary all have warned the $30 billion medical device tax will be passed on to patients, increasing premiums and raising prices for everything from artificial knees to pacemakers.
  • Prescription Drug Tax. The $34 billion tax on pharmaceutical companies also will be passed on to patients, raising prescription drug prices and increasing premiums.
  • Health Insurance Exchange User Fees. Insurers must pay a surcharge to sell plans in the exchange. In the federal exchange, CBO estimated in 2009 that the fee would add three percent to premiums.

CBO Forecasts Consistent Yearly Premium Increases

On April 14, CBO released updated estimates of the health care law’s insurance coverage provisions. It now expects the federal government to spend $1.032 trillion subsidizing health insurance from 2015 to 2024. This is $165 billion less than CBO predicted just two months ago, but the change is hardly good news.

Network narrowing increases premiums. CBO previously assumed health insurance plans offered in the exchanges would look similar to employer-based coverage options. Instead, to keep premiums down and increase plan options in the government exchanges, insurers narrowed their provider networks. CBO’s slightly lower projection is partially based on these restrictions. The report notes: “many plans will not be able to sustain provider payment rates that are as low or networks that are as narrow as they appear to be in 2014 … [that] will put upward pressure on exchange premiums over the next couple of years.”

CBO projects yearly premium increases. CBO forecast that “premiums are projected to increase by about 6 percent per year, on average, from 2016 to 2024.” While this might be lower than CBO estimated in November 2009, Americans will not see their health insurance premiums fall. Obamacare will continue to drive premium rates higher, despite the fact that Democrats promised their health care law would “lower premiums for the average family by $2,500.”

Health care spending is on the rise. Democrats contend that Obamacare caused national health care spending to slow. This is false. On April 1, the Bureau of Economic Analysis reported that during the last quarter, health care spending rose at its fastest pace in 10 years. CBO’s updated projections caution that rising annual health insurance expenditures, per person, will be the key metric driving premium costs over the next decade. If the current trend continues, consumers can expect to see costs climb. Even the Obama administration’s own Medicare actuaries said in September 2013 that the past slowdown in health care spending was due to the weak economy. The Kaiser Family Foundation released a study in April 2013 showing 77 percent of the recent decline in health spending could be attributed to the sluggish economy.

Obamacare’s Medicare Advantage Cuts Hitting Seniors Hard

Democrats raided a total of $716 billion from a bankrupt Medicare program – not to save Medicare, but to spend it on a failing health care law. Obamacare specifically targeted the successful Medicare Advantage (MA) program, cutting payments by $308 billion ($156 billion in direct payment cuts and another $152 in indirect payment cuts). On April 7, 2014, the Centers for Medicare and Medicaid Services released its final 2015 MA payment rates. Despite the administration’s claim that payment rates would increase 0.4 percent next year, multiple analysts reported the Obama administration’s payment changes actually constitute a cut of approximately three percent.

New research released this month estimates that the health care law’s mandated cuts – combined with the Obama administration’s regulatory changes – will reduce seniors’ average MA benefit by $1,538 per year, or 13.32 percent, when compared to pre-Obamacare rates. The average cut per person from 2014 to 2015 totals $317, or 3.07 percent.

Census Survey Change Hides Obamacare Impact

The administration still won’t say how many people who signed up for health insurance in the exchanges were previously uninsured. Researchers expected the Census Bureau’s annual income, poverty, and health insurance report to provide answers. But on April 15, 2014, the New York Times reported that the Census Bureau “is changing its annual survey so thoroughly that it will be difficult to measure the effects of President Obama’s health care law.” The Census Bureau confirmed plans to alter its longstanding health insurance survey questions and replace them with new methodology.

The Census Bureau’s actions mystified health care policy experts. Many questioned why the Census Bureau abandoned the basic rules of scientific data collection and suddenly changed its survey. The only logical answer is that Democrats are not confident Obamacare will substantially improve the nation’s uninsured numbers next year. So the Obama administration has employed flawed science to intentionally conceal Obamacare’s true impact on health insurance coverage. Multiple White House and other administration officials were intimately involved in the Census Bureau’s decision. According to the New York Times article, “The Department of Health and Human Services and the White House Council of Economic Advisers requested several of the new questions, and the White House Office of Management and Budget approved the new questionnaire.”

If the “most transparent administration in history” cares about data-driven policy, it will demand the Census Bureau delay its survey question changes for at least two more years.

OMB Director Burwell’s Obamacare Implementation Role

On April 11, President Obama nominated Sylvia Mathews Burwell to be the next Secretary of Health and Human Services. During her confirmation hearings, Ms. Burwell must answer for her role as OMB director in approving thousands of pages of Obamacare regulations. The Democrats’ health care law wraps businesses in reams of red tape – already more than 22,000 pages of regulations generated from a 2,700 page law. According to a March 24 analysis, Obamacare regulations have produced only $2.6 billion in annualized benefits compared to $6.8 billion in costs.

Issue Tag: Health Care