The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Drip Drip Drip

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Just like a leaky faucet, more stories are dripping out every day on how Obamacare (Affordable Care Act /ACA) is going to be complicated for people to enroll in it, that it is going to be very messy in 2014 when it officially starts, and that premiums are going to increase – by a lot.  Now comes a new report by the non-partisan Society of Actuaries that makes predictions on future costs and enrollment for insurance.  For example, they found that “The non-group cost per member per month will increase 32 percent under ACA, compared to pre-ACA projections.” So what happened to the average DECREASE in premium costs of $2500 that President Obama promised all of us?  They have not materialized and it is highly doubtful they never will. Just recently, Health and Human Services Secretary Kathleen Sebelius told reporters that some people purchasing insurance would see their premiums rise.  The Wall Street Journal blog noted the following:

The secretary’s remarks are among the first direct statements from federal officials that people who have skimpy health plans right now could face higher premiums for plans that are more generous.  She noted that the law requires plans to provide better benefits and treat all customers equally regardless of their medical claims. “These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market,” she said. “But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that they’re spending.” Ms. Sebelius added that those customers currently pay more for their health care if their plans have high out-of-pocket costs, high deductibles or exclude particular types of coverage, such as mental health treatment. She also said that some men and younger customers could see their rates increase while women and older customers could see their rates drop because the law restricts insurers’ ability to set rates based on age and gender.

Young people, concentrate on that last line. That means YOU will carry the load for older people, who likely have more health problems.   It is called cost shifting.  You know, spreading the wealth around, one of President Obama’s favorite terms. One should also focus on these phrases, “people who have skimpy health plans right now could face higher premiums for plans that are more generous” and have “high deductibles.”  In other words, someone who has a health savings account (HSA) will likely be forced into another, more expensive plan.  But if someone has a HSA and purchases a catastrophic coverage plan with a high premium (a less expensive health plan), they are the ones that are truly driving down the cost curve because they are purchasing true insurance.   A person does not purchase car insurance to use it for tune-ups or changing the oil, it is purchased to be protected from a catastrophic event, like a car crash.  If car insurance DID include oil changes and tune-ups, can you imagine how expensive it would be?  Health insurance is no different. The HSA can be used for routine purchases such as doctor visits and preventative care such as mammograms.  One huge gain from HSAs is the consumer shops around for the best price when it comes to purchasing routine health services.   This market-driven action encourages true transparency in healthcare costs, just like purchasing any other service or product.  But, when someone develops a serious illness or has an accident that is when the catastrophic healthcare plan will kick in. Whole Foods president John Mackey wrote about the benefit of HSAs during the healthcare debate in 2009.  He wrote how they encourage people to be wise shoppers, be more conscience of their personal health, and the resulting savings all this brings to healthcare costs.  Unfortunately, he was roundly criticized by the "crunchy granola types," the very people that patronize his stores. When it comes to Obamacare, just like government-run healthcare in other countries, people will over utilize the system because many will perceive it to be “free” thanks to the taxpayer-funded subsidies.  Also, people and employers will learn to “game the system” because it will be cheaper to pay the fine (Chief Justice John Roberts’ tax) than to purchase health insurance.  This is especially true since there will no longer be pre-existing condition barriers and people will be able to purchase insurance only when they need it.  All of these actions will drive up the costs for healthcare, necessitating government rationing, just like what has occurred in other countries with nationalized healthcare.  Look to Europe and its financial problems to see the path we are now on.   Americans are learning, just as many predicted, Obamacare is no panacea.

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