A new study finds even more bad news for health care over the next decade thanks to Obamacare. Dr. Stephen Parente, Director of the Medical Leadership Institute at the University of Minnesota, used enrollment data from the Department of Health and Human Services to look at 10 key states using a micro-simulation model to estimate pricing and coverage from 2015 through 2024. He found that the number of uninsured Americans will increase by about 10%, premiums will continue to rise and that options available to consumers will decrease.
If you think premiums are expensive now, just wait until after 2017.
As my colleague at the Medical Industry Leadership Institute, Michael Ramlet, and I show in a paper published last month, the law’s structural problems will take years to fully manifest.
Using the 2014 health-insurance exchange enrollment data and a micro-simulation model funded in part by the Department of Health and Human Services, we estimate the national and state impact of the Affordable Care Act on insurance prices and enrollment from 2015-24. The average premium for an individual exchange health plan (Silver) will increase by $1,375 by 2019 while the average family premium for the same plan will increase by $4,198—outpacing the average increases from 2008 to 2013. Consumers who saw spikes in their health premiums last year will experience the same trauma this year. But the steepest price increases will not occur until 2017 and after, when three things happen.
First will be the Affordable Care Act’s “essential benefits” requirements. All plans—including those currently exempted for hardship and old plans extended for various reasons—must provide all of the law’s mandated benefits from Jan. 1, 2017. On average roughly 15% of plans offered in 2013 will not qualify for sale on the insurance exchanges once all extensions are completed. Depending on the state, as many as 60% of the plans sold in 2013 would not be permitted for sale.
The law’s “reinsurance” program will also expire in 2017. Health insurers will no longer be able to bill the government for 80% of a patient’s health-care costs when they make more than $45,000 in annual claims. The multibillion-dollar risk corridors for insurance companies will also sunset in 2017—ending the taxpayer bailouts that kick in when insurance companies providing ACA plans lose money. Insurance companies will have neither option by 2017, leaving consumers to pick up the tab through premium payments. Federal subsidies will be unable to keep up with such dramatic rate spikes.
Confronted with this cost crisis, consumers will react the only way they know how: by looking for cheaper options such as the remaining high-deductible health plans offered by private companies and the exchanges as well as plans with very limited physician and hospital networks geared to achieve maximum efficiency for the average patient. These plans are likely to provide no or limited access to specialized facilities and physicians. Rising premiums will create a cyclical exodus from insurance plans, with each wave of departures fueling premium spikes that cause even more departures. (Read More)
The news only gets worse from there. Americans with plans through their employers won’t be exempt from the pain either, nobody will.