There’s an interesting op-ed at The Wall Street Journal from Stephen Parente in which the author attempts to get his hands around the likely pattern of rate increases for healthcare insurance plans offered under the federal healthcare insurance marketplace, Healthcare.gov:
Using the latest health-insurance-exchange enrollment data and a microsimulation model funded in part by the Health and Human Services Department, I estimated the premium increases that could occur as a result of the expiration of risk corridors and reinsurance. My model also assumes that 2017’s big premium increases will be spread out over both 2016 and 2017 rates.
My research shows that the average 2016 family plan could experience premium increases of 11.2%, compared with 8% hikes for individual plans. The relatively cheap bronze plans, which cover 60% of a consumer’s health-care costs, could see the highest jumps—16.6% and 11.5%, respectively. Individual silver plans could see a relatively low increase—3.1%—but families won’t be so lucky, potentially paying 8.4% more.
That won’t stay the same in 2017, however, when individual silver-plan premiums could rise by an average of 12.1%, surpassing a 9.2% increase for families. Across every type of health-care plan—bronze, silver, gold, platinum and catastrophic—families could be looking at average increases of 7.3%, compared with 11% premium hikes for individual plan holders.
To put these numbers in context: For consumers with silver plans, which account for about two-thirds of the ACA market, the average individual could see annual premiums rise to $3,700 over the next year and a half from $3,200. A family could expect an increase to $15,400 from $13,000 over the same period.
After 2017, most ACA-compliant plans will likely fall into a pattern of annual premium increases of between 3%-6%, which will persist for the next decade and likely beyond. By 2023, I estimate that the average family plan could be 61% more expensive than it is in 2015, with individual plans only one or two percentage points behind. These increases are so high that direct taxpayer subsidies to consumers are unlikely to keep up. So the cost, both financially and politically, will become increasingly intolerable.
I would expect that the reaction of many consumers to these price increases will be to lower their metal tiers, i.e. people who elected gold plans will change to silver, those who elected silver plans will change to bronze. Because of the increased deductibles implied in that decision, that has serious implications for the non-healthcare components of the economy. Increasingly, people will just be spending more of their incomes on healthcare with the concomitant reduction in overall economic activity.
The free marketers may get what they want. People will start economizing on healthcare. I know of no study that suggests that when people economize on healthcare they distinguish between necessary healthcare and unnecessary healthcare, i.e. that they do so prudently. The conundrum remains how do you control the cost of healthcare while preserving a reasonable level of public health.
Perhaps after President Obama leaves office we can return to the pressing business of reforming our healthcare system. I see little prospect of it before then.
My husband and I have individual health care plans. The premium for his 2016 increase arrived last week, and it was just shy of 12%. Last year it rose 10%. My son’s insurance was canceled last April, due to the insurance company leaving the state of CA. He doesn’t have any insurance.
I actually know more people now without insurance than ones who have benefited from the passage of the PPACA. The reason for the former is that they don’t qualify for subsidies and can’t afford insurance, or they can’t rationalize the insurance offered because of the high deductibles. So, they are patching in their care thru clinics etc., becoming private pay patients, when they can afford it.
Rates dropped for my group last year. The first time ever. They are going up 7% this year, though we changed to a bit different plan.
Steve
Anyone else ever notice that people who dislike Obamacare have models that end up with it performing poorly, while those who support it have models showing much better results?
Steve
Anyone else ever notice that people who dislike Obamacare have models that end up with it performing poorly, while those who support it have models showing much better results?
Steve, people have different experiences along with different perspectives because of those experiences. I don’t invalidate yours because they are better than mine. Please don’t invalid mine because of the opposite effect I’m seeing in the implementation of Obamacare.
Although I’m not nursing anymore, I’m interested in the delivery of medical care, openly talking to people about it. And, what I’ve found is a selective (very selective) benefit via the PPACA available to some, while others seem to be experiencing somewhat of a punitive effect.
Interestingly enough, a common variable seems to be that many of those who had satisfactory health care benefits before the enactment of the PPACA have found themselves lacking — either with increased costs or not being qualified to be in the subsidy loop. However, those who didn’t have insurance have been able to attain it through subsidies or via the medicaid expansion. Now, you can define this as a success, according to your own professional perimeters and medical experience. However, I don’t think it’s an equitable nor sustainable program, in the sense of giving quality, even similar care, to those who freely chose their healthcare plans prior to the PPACA coming along.
Interesting that you would mention quality. The ACA has really forced me to spend a lot of time on the issue. For the first time in over 40 years in the medical field, it is a big deal. We are instituting a new electronic pre-op system that will screen all patients, determining what pre-op tests they really need. Rather than individual docs just guessing or ordering everything (think orthopedists). Will save a bundle while increasing quality. Since the ACA means costs incurred for 60 days after a procedure are bundled into the procedure fee, for the first time hospitals will be forced to integrate hospital care with follow up in the community, especially pain control.
One of my favorites started out as a cost cutting effort. We have developed a pretty nifty program for calculating the costs associated with every procedure for everyone doing a given procedure. The intention was to eventually economically credential docs. What we have found though, is that there is a very strong correlation between lower costs and better quality. Lower complication rates, lower infection rates, fewer readmissions.
Of course, when the deeper cuts caused by the ACA come in to play, I won’t be happy, but it has both freed us and forced us to do things we should have done long ago.
Steve
Steve, I don’t have to be sold on the cost effectiveness of doing more prudent diagnostics, rather than throwing the kitchen sink of tests at patients. Ever since nursing school days this has been obvious to me, that too many tests, too many meds and too little team work between doctor/staff/patient was a big problem in the delivery of good health care that didn’t careen needlessly into high cost medical services.
One of my favorite nursing school clinicians was an ex nun who answered questions with questions. Her intent was to create critical thinking among her students, prod curiosity to do their own research and to elevate patient care to an advocacy, rather than a rote job as an order-taker from physicians. Consequently, “why” was a frequent response given when a student would present their reasoning in the development of patient care plans.
This philosophical independence was something I was drawn to and adopted in both my professional and private life. And, what I’ve noted is that most conscientious physicians seemed at least receptive to the notion that instituting more procedures do not necessarily create better patient health. These same physicians were also given to working with, even soliciting suggestions, from nursing staff, as well as creating proactive and communicative partnerships with their patients.
Ironically, IMO, it was the allocation of unsatisfactory physician stipends, allowed in the government designed medicare/medicaid programs (mediated annually by the ludicrous Congressional Doc Fix) that has paved the way for the costly volume of unwieldy testing burdening our medical system. In reality, some of the PPACA’s measures have been to fix some of the unintended consequences of the government’s own making. The same, IMO, is true of how they have now devised their unholy alliance with insurance companies in creating plans that are oftentimes incongruent with a patient’s age, gender, family needs etc.. Finally, and most significantly, people’s health services have been further compromised by this law’s confusing implementation practices in how it arbitrarily reorganized health care plans, mandating choices through oftentimes insufficient exchanges that are inferior, more costly, and less convenient than the ones people formerly had selected and paid for themselves.