Obama's 2009 Promise of Cheaper Health Care Has Become 2013 Price Hikes

08/28/2013 08:31

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by Sally Pipes

Remember when President Obama promised back in 2009 that his health care reform plan would cut insurance premiums for the average family by $2,500? Four years later, those promised cuts have morphed into admissions of price hikes.

Indeed, America's health cost crisis shows no signs of stopping. And Obamacare will only make it worse by injecting more government into the health sector.


The latest data aren't kind to Obamacare. According to a new study from Bank of America Merrill Lynch, 70 percent of chief financial officers cite health costs as their top concern, up from 51 percent last year, mainly because of what they expect Obamacare to do to costs.

Many smaller companies are contemplating dropping family coverage -- and will instead offer benefits to workers only, thanks to the higher costs on the way because of Obamacare.

"Insurance companies have already warned small business customers that premiums could rise 20 percent," the Associated Press recently reported.

Georgia insurance commissioner Ralph Hudgens said that premiums for individuals in his state's health insurance exchange could be 198 percent higher than what's available there today. "Georgia consumers cannot afford these massive rate increases," Hudgens wrote to Kathleen Sebelius, the Secretary of the federal Department of Health and Human Services.

Ohio estimates premiums will shoot up an average of 41 percent. Indiana officials say theirs will climb 72 percent.

Obamacare's defenders cite the recent slowdown in the growth of health spending as proof that the law is working as promised. In 2011, national healthcare spending climbed 3.9 percent, the same as the year before. That was the slowest increase since the 1960s. Premiums for employer-provided insurance went up 4 percent last year -- moderate by historical standards, according to the Kaiser Family Foundation.

But it's hard for the Obama Administration to take credit for these decreased rates of growth given that the bulk of Obamacare -- including the law's cornerstones, the employer and individual mandates -- hasn't yet taken effect.

One key factor moderating the growth of health costs is the recent recession. As thousands of Americans lost their jobs, they also lost their health insurance. And when they did so, they slowed their consumption of health care. Indeed, according to the Kaiser Family Foundation, "about three-quarters (77%) of the recent decline in health spending growth can be explained by changes in the broader economy."

Another contributor to the slow growth of health costs is a trend that the president and most Democrats want nothing to do with -- the increasing popularity of market-based, consumer-directed health plans.

Today, more than 15 million Americans are enrolled in such plans, which combine high-deductible insurance policies with tax free health savings accounts (HSA). That's an increase of 15 percent over last year, and more than double the number from just four years ago.

These plans control costs by giving consumers a direct financial stake in their healthcare decisions. If they stay healthy and avoid needless medical expenses, they can keep the proceeds of their savings accounts -- forever.

The rise of HSAs has spurred other welcome trends -- such as the growth of low-cost retail health clinics, more information on doctor quality, and greater transparency on costs.

This is how a functioning market should operate. But Obamacare undermines these principles at every turn.

For starters, Obamacare keeps patients in the dark about the cost of their care by requiring insurers to provide first-dollar coverage for many procedures, imposing strict limits on out-of-pocket costs, and outlawing some low-cost, high-deductible plans. As a result, premiums will shoot higher.

The law's community rating regulations, which bar insurers from charging the old more than three times what they charge the young, amount to modified price controls that will drive up premiums as well. Old people are generally less healthy and therefore more costly to insure than young ones. Consequently, premiums for the young will increase, so as not to fall afoul of the three-to-one community-rating ratio. In effect, the young will be forced to subsidize coverage for the old.

Finally, Obamacare lards on hidden taxes and fees that make coverage less affordable -- without improving care. The feds have imposed a 3.5-percent excise tax on every health plan sold through the law's exchanges to offset the costs of running these new manufactured marketplaces.

President Obama often says that if anyone has a better idea on how to extend insurance coverage and improve the quality of the nation's health care, he's open to it.

Well, here's one -- it's called the free market.

In every other aspect of our economy, market competition has lowered prices, improved quality, and expanded the availability of goods and services. It's why there are low-cost flat-screen TVs in almost every home and mind-bogglingly advanced cell phones in virtually everyone's pocket.

Market reforms represent the solution to America's health cost crisis, too.


Article originally appeared here.

[Ed. note: One of the provisions of the ACA is that insurance companies can't charge their oldest customers a premium that is three times greater than the lowest premium they can offer.  On paper this sounds great. It protects seniors who have to deal with relatively high health care premiums. But there's a couple of problems the White House is overlooking.  For one, policy has a tough time dealing with reality. Seniors have higher premiums because they're more likely to incur medical costs.

And two, this golden health care ratio that the government created won't stop high premiums on seniors. You see, health care companies are free to increase premiums for younger customers, thus raising the lowest premium, allowing them to raise rates for seniors. In the end, young Americans pay higher premiums to subsidize senior premiums. Everyone winds up paying more in the end, regardless.  Everyone pays more, that is, if they don't know how to operate outside of the ACA. The government tried to give this law teeth, and the Supreme Court ruling in 2012 would make you think that there's no way to escape it.  But there is one. A friend of ours who's travelled the world looking for the best health care money can buy found a solution to the upcoming problems. One that can save you thousands while everyone else has to deal with rising premiums.

Click here to check out his findings, and find out how you can join the growing number of people standing up to Obamacare.