Health plan premiums more than doubled in price since the Affordable Care Act (ACA) made health coverage, well, unaffordable. A 50-year-old with an ACA plan must pay 129% more today than a dozen years ago. During this same period, employee health plans rose in price by about half that amount (68%). This data is based on work by the Paragon Institute. The following is from Kaiser Family Foundation (KFF) Health News:
Paragon’s president, Brian Blase, told KFF Health News that this shows the ACA has made health care on the individual market more expensive.
Indeed, it did at least for most enrollees. Yet, KFF tries to argue that it’s not an apples-to-apples comparison. Purportedly, employer coverage prior to Obamacare was more generous than what was typically sold in the individual market. That may be true, mostly because individuals could choose what they were willing to pay for but received no tax exclusion. Moreover, KFF claims that essential health benefits (EHB) – that is the mandated benefits that all plans must now cover – did not increase costs other than the fact that plans can no longer price premiums for risk, turn away bad risks or place limits on annual and lifetime benefits. Basically, KFF is saying individual policies were stingy before Obamacare so they increased at twice the rate as employer plans now that consumer discretion is limited to what ACA architects believe is good for you. How is that not increasing at twice the rate of employer plans?
KFF also quotes Edmund Haislmaier from the Heritage Foundation, who confirms that states that already had ACA-type regulations prior to Obamacare experienced slower premium grown after the ACA was passed. Yes, because premiums in Massachusetts, New York, New Jersey, Connecticut and Washington State were already sky high due to mandated benefits and regulations that later became the model for the ACA. That begs the question: since we already had experience with these costly regulations why were Democrats so enamored with them? The likely answer is the mistaken belief that if everyone was forced to have the same coverage, costs would magically fall. Stated another way, if the uninsured rate was lowered from 10% to 1%, 2% or 3% then hospitals would suffer less uncompensated care and magically lower their prices and stop price gouging. In retrospect that doesn’t make any sense but neither did it make sense in 2010 when Obamacare was debated. KFF’s own data shows the average employee health plan is still more generous than the more popular ACA plans. Both types of plans saw average deductibles rise by nearly 60%. More from KFF:
Over time, ACA deductibles — the amounts policyholders must satisfy in a given year before insurance kicks in — have seen large increases, with “bronze” plans now averaging $7,476 annually, up from $5,113 in 2014, according to KFF, a health information nonprofit that includes KFF Health News. Bronze plans tend to have lower premiums than the other metal-level categories — “silver,” “gold,” and “platinum” — in part because of their higher deductibles.
The weighted average — a calculation that gives more weight to ACA plans with the most people enrolled — shows about a 55% increase in annual deductible amounts since 2014, from $1,881 to $2,912. During that same period, deductibles in plans offered by employers rose on average 59%, from $1,186 to $1,886, according to KFF’s annual employer survey.
The biggest cost driver of ACA plans is that Obamacare expanded the cross-subsidy mechanism from healthy to sick. Whereas most enrollees – close to 90% – do not surpass their deductibles by much (if at all), the sickest 5% or 10% have no limits placed on the amount of care they can receive. Half of all health care spending in on the sickest 5% of patients. Need a $1 million dollar drug? Obamacare mandates that you can get it. Why do $1 million dollar drugs exist? Because of Obamacare created a market for multimillion dollar drugs, whereas there did not use to be one.
KFF argues that the ACA did not make health insurance premium unaffordable. Yet, no left-of-center public health advocates support allowing insurance companies to sell the type of coverage most Americans want and are willing to pay for. The ACA purposedly made Obamacare a bad deal for most.
KFF Health News: Evidence Shows ACA’s Mandated Benefits Alone Don’t Drive Up Costs. The Debate Continues