Obamacare drives up health care costs for everyone – San Francisco Chronicle

Obamacare drives up health care costs for everyone -San Francisco Chronicle.

Sally C. Pipes

The Centers for Medicare and Medicaid Services recently released their annual report on health care spending in America. And surprise, surprise – spending continues to grow. It amounted to 17.9 percent of the nation’s gross domestic product in 2010, or $2.6 trillion. But the annual rate of growth was lower than it had been most of the past 50 years – just 3.9 percent.

Naturally, the Obama administration took credit for this sliver of good news. “Thanks to the Affordable Care Act, we’re keeping costs down and making health care more affordable,” wrote Nancy-Ann DeParle, deputy chief of staff for policy, on the official White House Blog.

But an in-depth look at that report reveals that Obamacare has done little thus far to slow the growth of American health spending. In fact, the federal health care reform effort is already increasing the share of spending shouldered by taxpayers. Worse yet, the implementation of Obamacare has barely begun.

As the law’s various provisions begin to take effect, the pace of spending will only accelerate. The report was clear about what’s restraining health care spending – and it’s not Obamacare. As the report put it, the “impact of the recent recession continued to affect the purchasers, providers and sponsors of health care.” The agency’s researchers went on to cite “[p]ersistently high unemployment, continued loss of private health insurance coverage, and increased cost sharing” as reasons that “led some people to forgo care or seek less costly alternatives.” In other words, it’s the economy, stupid.

Obamacare may have actually increased national health spending. According to the centers’ report, “the projected net effect of (Obamacare’s) provisions on health spending in 2010 was approximately 0.2 percentage point.” That’s not much of an increase – but it’s an increase nonetheless. Senate Republicans have pointed out that the centers’ latest report is consistent with its April 2010 prediction that Obamacare would increase national health spending by $311 billion in the next decade.

And the government has gotten a head start on all that new spending. Federal health care disbursements increased from $530 billion in 2007 to $743 billion in 2010 – a jump of 40 percent. Medicare spending grew at a 5 percent clip, while Medicaid spending rose 7.2 percent, more slowly than the previous year. As a percentage of total health care spending, federal, state and local government expenditures increased from 41 percent in 2007 to 45 percent in 2010.

The president’s health care law will only exacerbate these long-term trends once it goes fully into effect. In 2014, the centers project that health spending will rise 8.3 percent, thanks in large part to Obamacare’s expansion of Medicaid to bring health care to 30 million more Americans and its new subsidies for Americans to purchase health insurance in the state-based exchanges. And by 2020, officials estimate that government will account for half of American health care expenditures.

But what about private health insurance? While campaigning for the White House, President Obama repeatedly pledged that his health reform package would lower the average family’s annual premiums $2,500 by the end of his first term. He’s got about a year to fulfill his promise – and it doesn’t look as if he’ll succeed. The report pegged the growth in spending for health insurance premiums at 2.4 percent in 2010. Meanwhile, survey data from the Kaiser Family Foundation reveal that the average annual premium for family coverage hit $15,073 in 2011, a 9 percent increase over 2010. And according to a survey conducted by the Mercer consultancy, employers expect the cost of health benefits to rise by 5 percent this year.

With all these data in the mix, it’s hard to see how the White House could crow about “keeping costs down and making health care more affordable.” Instead, Obamacare is driving up health costs for Americans today – and saddling the next generation with trillions of dollars in new health care liabilities.

Sally C. Pipes is president and CEO at the Pacific Research Institute. Her latest book is “The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare,” (Regnery 2012).

Higher Health Insurance Premiums This Year? Blame ObamaCare – Forbes

Cover of "The Truth About Obamacare"

Cover of The Truth About Obamacare

Higher Health Insurance Premiums This Year? Blame ObamaCare – Forbes.

Sally Pipes, Contributor

Most Americans saw their insurance bills jump this year, according to a new study from the Kaiser Family Foundation. The average employer-based premium for a family increased a startling 9% in 2011. Over the next decade, rates are expected to double.

The Kaiser report is only the latest piece of research to indicate that ObamaCare isn’t driving down health care costs, as its proponents promised, but is instead accelerating their rise.

This year, the average premium for a family hit $15,073 — $1,303, or 9%, higher than the year before. And that’s on top of increases of 5% in 2009 and 3% in 2010.

Employees are picking up a substantial portion of that tab. They paid an average of $4,129 for their family insurance premiums this year — more than double what they shelled out 10 years ago. And that figure doesn’t include out-of-pocket health expenses.

These premium hikes have outpaced general inflation and salary increases — and thus are swallowing a greater share of American households’ budgets. A study published in the September 2011 issue of Health Affairs found that burgeoning health costs have decimated nearly an entire decade’s worth of income gains. In 2009, the average American family had just $95 more to spend at will than it did in 1999.

Worse, there’s no relief in sight. Next year, employers expect premiums to rise 7.2%, according to the National Business Group on Health.

Over the next ten years, American families can expect rising health costs to continue to offset pay raises. According to the Kaiser study, premiums are set to reach a whopping $32,175 by 2021. And more than 50% of employers have stated that they plan to shift a greater share of health-insurance costs onto their employees.

ObamaCare is to blame for much of these impending increases. Richard Foster, the Chief Actuary for the Centers for Medicare and Medicaid Services (CMS), reports that America will spend an additional $311 billion on health care in the next decade because of the law.

CMS estimates the growth in health insurance costs will increase 10 extra percentage points in 2014 because of ObamaCare — a 14% increase, versus 3.5% without the law.

In 2020, the net cost of health insurance is estimated to be $271 billion. Without ObamaCare, that number would have been $248.7 billion — a difference of more than $22 billion.

ObamaCare drives up the cost of insurance by piling mandates and required coverage benefits onto every single policy.

Consider the so-called “slacker mandate,” which requires all family policies to cover adult children until they turn 26. According to a recent federal report, nearly 1 million young adults gained health coverage this year thanks to the mandate.

Of course, adding them to their parents’ policies isn’t free.

Towers Watson found that the rise in young-adult enrollment was responsible for premium increases of as much as 3% at many firms.

Even the feds admit that the mandate means that families will pay more. According to HHS, each new dependent will tack on an additional $3,380 to their parents’ insurance costs this year. By 2013, extra dependents will add $3,690 to families’ annual insurance bills.

That cost impact is even more significant because most of those who seek coverage through their parents know that they’ll need care. This “adverse selection” issue results in a sicker — and thus costlier — overall insurance pool.

Or take the “essential benefits package” — the list of healthcare services that all policies must cover. Already, benefit mandates at the state level force up premiums by an average of 10.5%, according to Pacific Research Institute scholar Dr. Benjamin Zycher.

Slathering federal mandates on top of existing state mandates will drive costs even higher — and thereby make coverage unaffordable for more people. Massachusetts Institute of Technology economist Jonathan Gruber — a supporter and architect of ObamaCare — estimates that a 10% hike in the cost of the essential benefits package could increase the number of uninsured by 1.5 million.

There’s no way around it — ObamaCare isn’t saving anybody money. Americans should agitate for its full repeal and replacement– before they watch the cost of their health insurance consume yet another year’s worth of salary gains.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is The Truth About ObamaCare (Regnery 2010).