Obamacare already raising, not lowering, healthcare costs

Republicans have argued that Obamacare is “bad medicine and bad policy” for a number of reasons, including the idea that it will raise, not lower, healthcare costs. So far, they’re being proven right.

The law is little more than two years old. Yet, as Politico’s Jennifer Haberkorn reports:

Many of the small-business and individual insurance policies are working the health reform law’s 2014 fees into their 2013 bills, contributing to double-digit premium increases for some people.

All those new consumer benefits packed into the health reform law — birth control without a co-pay, free preventive care and limits on when insurers can turn down a customer — had to be paid for somehow.

So the law’s drafters included a new tax on health insurers, starting at $8 billion in 2014 and increasing to $14 billion within four years, to help meet the new expenses. And insurers in 2014 will also have to pay a “reinsurance contribution” to cushion health plans that end up with a lot of sick customers under new rules requiring them to cover people with pre-existing conditions.

Some health insurance companies are getting a jump-start, passing on those 2014 fees to consumers in policies that start in 2013.

While insurance rates have been going up for years — and not all of the new increases can be pinned to the health law — the hikes will certainly give more fuel to Obamacare critics.

They certainly will. I’m not pretending to have a crystal ball here, but the evidence I’m seeing in dialogue from insurance providers and in 2013 rates tells me that healthcare insurance costs will be going up, not down, in the near term. Long term assessments might vary, and I don’t have to tools to make any accurate predictions.

The Pacific Research Institute, on the other hand, does. In an article in Forbes, their president, Sally Pipes, points out that healthcare premiums have increased $2,000 in the last two years, despite the President’s promise that Obamacare would lead to a $2,500 reduction. She goes on to state that more than one fourth of workers will pay higher healthcare costs over the next 10 years than they would without the law. The effects can already be seen on the state level:

Even Obamacare’s backers admit that the law will boost premiums.

Massachusetts Institute of Technology economist Jonathan Gruber — one of the architects of Obamacare — has studied the law’s effect on premiums in the individual market in three states. In each, he found substantial increases in premiums — a 30-percent hike in Wisconsin, 29 percent in Minnesota, and 19 percent in Colorado.

This, of course, flies directly in the face of the White House’s claim that their bill would lower costs. Based on the data I’ve looked at, that’s just not happening.

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Posted in Fiscal Policy, President Obama
8 comments on “Obamacare already raising, not lowering, healthcare costs
  1. This is probably news to the 111th Congress that didn’t bother to read the bill before they passed it.

  2. lucy says:

    Agreed many companies have stopped hiring, and reducing employee hours. Many of our products that we purchase from distributors have gone up 30-50% already.

    • Trickle-down taxes are a real thing. I wish I had all the time and knowledge I needed to explain that to more people because it’s pretty misunderstood.

      If this bill doesn’t reduce costs – in fact, raises them – then why are we creating unnecessary burdens on the market?

  3. This is a big opportunity for problem-solving conservatives. It sounds like the GOP has mostly dropped the idea of repealing the ACA. Even if they insist on pursuing repeal, the reality is that its here to stay. They should direct their efforts to improving it now. I would love to see the ideas that the right could bring to the table.

    My sense has always been that Obama is well aware of the flaws in Obamacare. I’d be willing to bet the GOP could pass some reforms with almost no negotiation needed. A Republican politician willing to step out and negotiate in good faith would be, in my opinion, rewarded by public opinion. People are dying for some bi-partisan problem solving. That’s why Chris Christie is doing so well right now.

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