As Niels Bohr wisecracked (frequently misattributed to Yogi Berra), prediction is hard especially about the future. In this WSJ op-ed medical industry researcher Stephen T. Parente tries to predict the future of healthcare insurance:
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.
The three things that will happen are
- The PPACA’s mandatory required benefits will be kick in.
- The reinsurance program that protects insurance companies from cost overruns will end.
- More employers will drop their insurance plans.
All of these will work synergistically not only to increase the cost of healthcare insurance but the cost of healthcare as people perceive it based on what they actually pay out-of-pocket. Families, already paying more for healthcare due to the increased deductibles and copays on top of rising prices of the new plans in which they’re enrolled, will complain to their Congressional representatives.
Another factor not mentioned in the op-ed: the federal government’s share of the costs due to the expansion of Medicaid will expire. That on top of the predicted increased in Medicaid enrollment will put additional pressures on states for which Medicaid is already their largest spending line item. Pressure will build to do something.
Here’s Mr. Parente’s last prediction:
Either way, there will be a significant number of uninsured Americans unwilling or unable to pay for the inflated insurance available on the exchanges and forced to pay penalties, which for 2016 and thereafter will be the greater of $695 or 2.5% of income. More will choose this option every year. By 2024, Ms. Frogner and I estimate that there will be more than 40 million uninsured, roughly 10% more than today.
I don’t think, as Mr. Parente does, that will result in the death of the PPACA. I don’t know what will happen. To me it just highlights something that has been obvious all along, that if reducing healthcare spending is politically impossible so is universal coverage. The two go hand in hand but with a causality in reverse of what the architects of the PPACA believed. If healthcare costs go down you can afford to insure more people. Insuring more people does not necessarily mean that healthcare costs will go down.