The AP reports "Medical claims costs — the biggest driver of health insurance premiums — will jump an average 32 percent for Americans’ individual policies under President Barack Obama’s overhaul, according to a study by the nation’s leading group of financial risk analysts." Going on, they write: "the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers. ... By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said."
The AP also reports the Administration's response: the study "focused only on one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. "
Those are not "cost relief strategies"; they are cost-shifting strategies. There is no such thing as a free lunch. That is economics 101. Someone, somewhere is paying or will one day be required to pay for those tax credits and "special payments to insurers". All of this is just redistribution: some people are going to be able to buy more medical care from healthcare providers, while others are going to have less purchasing power or reduced savings to fund the tax credits and "special payments to insurers."
One of the study's authors responded correctly that they "did not attempt to estimate the effect of subsidies, insurer competition and other factors that could mitigate cost increases. She said the goal was to look at the underlying cost of medical care." That's exactly right. The tax credits and "special payments to insurers" are just mechanics to obscure the cost, by diffusing the cost away from the purchase of healthcare and bury it in various government programs and insurance company rate increases, which can then be thunderously attacked by politicians looking to secure their electoral future. Someone needed to strip away those efforts to obscure things and get at the true cost of the political decision that was made in passing Obamacare.
The other big expansion of access to health care effected by Obamacare was the expansion of Medicaid, which per the Supreme Court decision required state consent. Many states, although none governed by Democrats, have chosen not to consent for fear of being stuck with the bill for a large unfunded entitlement should the federal government in the future reduce its initial subsidies of that expansion. To induce them to expand access to health care, the Administration has been bargaining to allow those states to direct the Medicaid expansion funds to private insurance companies, even though this will be more expensive than simply expanding Medicaid. The states like this because they don't have to expand something that they have to fund. Obviously insurers like it because they get government funded premiums. And the Administration justifies this because Medicaid is such a poor method of health coverage that people are better off getting private insurance coverage. But the bottom line is Obamacare just got more expensive again.
And while it keeps getting more expensive, the Senate has voted in its budget (the first one it has passed since it passed Obamacare) to eliminate the tax on medical devices that Obamacare imposed in order to create enough revenue to make the overall act appear fiscally neutral by CBO standards, thereby complying with the "paygo" law that requires all incremental spending to be paid for. So, in every respect, the fears of those who warned that Obamacare rested on false projections and data and would never be able to deliver on the promises it made within the budget that it proposed, are being proven true.
