My first book on ObamaCare was entitled The ObamaCare Train Wreck. This title has become a reality for some Americans. Here’s the story of one family:
Christopher E. Press is the former president of Blanchard Valley Hospital in Ohio and now works as a healthcare consultant and adjunct professor at Emory University’s Rollins School of Public Health. Recently he shared his own family experience in a Wall Street Journal article.
Press says his annual healthcare insurance premium has become his family’s biggest expense. More than his mortgage, more than his property taxes, or even his state income tax. More than his annual food or energy costs. Just the increase in his premium this year of $194 per month he estimates could allow him to purchase a Chevy Sonic or Ford Fiesta. He calculates his premiums since 1999 have risen 350%.
Press calculated what he calls his “healthcare cost risk” – the sum of definite payments (premiums) plus potential payments (copays and deductibles). Since early 1999 his family’s healthcare cost risk has increased 1,190%. Over the same time period, the Dow Jones Industrial Average has risen about 80%, the consumer price index is up 42%, gold is up 200%, median new home prices are up 74%, and the average cost per gigabyte of hard drive is down 99% to under three cents from $22.
His actual numbers show a depressing story. In 1999 he enrolled in Blue Cross/Blue Shield and insured his family of four for $274 per month with a $250 per-person deductible. That year his healthcare cost risk was $274 x 12, plus $1000 in deductibles for a total of $4,288 (maximum out of pocket risk). By 2009, those figures had jumped to $10,716 in annual premiums plus $2,000 in deductibles for a total risk of $12,716 – a threefold increase in healthcare cost risk over ten years.
The Impact of ObamaCare
However, since the passage of ObamaCare in 2010, his increase has been more than four-fold. In 2014 his family had reduced to two (his children grown and out of the household) yet his premium for just two was $1,037 per month ($12,444 per year) plus a $12,600 deductible making his healthcare cost risk $25,044 per year. But it got even worse in 2016. Now it is $27,672. He calculates his individual share of the risk at $13,836 – more than 13 times his risk of $1,072 in 1999.
If you’re insured through your employer you may think your experience has been much better – and it probably has been. But what you may not realize is that your employer has been absorbing these cost increases in healthcare and you have suffered from lower wages than you might have had if healthcare costs were not rising so fast.
The Obama administration pretends that the rise of healthcare spending has been slowed by ObamaCare. But the truth is the opposite.
The rate of growth of healthcare spending was actually declining from 2002 to 2009 before ObamaCare. According to the Center for Medicare and Medicaid Services (CMS) the growth of healthcare spending was 9.7% in 2002 and declining steadily to 3.9% in 2009. This decline is attributed to the growth of Health Savings Accounts (HSAs) and the passage of The Medicare Modernization Act of 2003, which created Medicare Advantage plans and the Medicare Part D prescription drug benefit.
Since 2010, when ObamaCare was passed, the rate of growth of healthcare spending has increased again. In 2014 healthcare spending grew 5.3% after the first full year of the implementation of ObamaCare. CMS now projects it will continue to grow at an average rate of 5.8% from 2014 to 2024. ObamaCare has therefore exacerbated our healthcare-spending problem.
Healthcare insurance premiums are rising faster since implementation of ObamaCare – in some states much faster. According to the Kaiser Family Foundation, insurance premiums in 2016 rose 38.4% in Tennessee, 31.4% in Alaska, 32.2% in Colorado, and 25.5% in North Carolina.
ObamaCare is fundamentally flawed because it mandates minimum coverage requirements that don’t fit the needs of individuals – like mammograms for men and prostate exams for women. It requires community rating instead of real actuarial analysis and only allows prices to spread out over three levels instead of the usual six. Add to this the required coverage of all pre-existing conditions, the ability to enroll after you become sick, and no incentive to maintain continuous coverage and you have the reasons for rapidly rising premiums. Insurance companies cannot make a profit in this contrived business model and premiums must rise to compensate for losses.
Even a mandate to purchase coverage or face a penalty has not been sufficient to encourage healthy, young people into enrolling for coverage that is expensive and unnecessary for most. The result is a coverage pool that gets older and sicker and therefore more costly.
These fundamental flaws require the repeal of the law and replacement with a system that allows individuals the freedom to choose the coverage that best fits their needs, provides coverage of pre-existing conditions as long as coverage is maintained, incentivizes individuals to make responsible decisions (HSAs), and doesn’t penalize the young and healthy for participation.
(Tell me your personal experiences with healthcare premium expenses.)