Is the Affordable Care Act Affordable?

By Grace-Marie Turner

When President Obama was promoting passage of health reform, he promised that the average American family would save $2,500 a year on health insurance costs. But since the law passed in 2010, costs have risen by more than $5,000.

According a report by the actuarial firm Milliman, a typical employer’s family plan cost a total of $18,074 in 2010 and $23,215 in 2014 — counting employer, employee and out-of-pocket costs.

The Affordable Care Act is not more affordable for those with employer coverage and certainly not for taxpayers. A new study from Bloomberg Government found that the health law so far has cost taxpayers $73 billion — including $2 billion on the website.

That is substantially more than the Congressional Budget Office initially estimated reform would cost by this point. That number doesn’t include projected spending on Medicaid expansion, which brings the cost to more than $90 billion.

So it is not surprising that a new in-depth poll of attitudes toward the Affordable Care Act conducted by Public Opinion Strategies for Independent Women’s Voice shows rising health costs to be the top complaint about the law.

The White House has made headlines saying that premium increases for next year will be modest. But officials cite a selective study focusing on only some of the fewer than 5 percent of Americans who are getting coverage through health insurance exchanges created by the ACA. Some states have reported that average premiums will increase by less than 10 percent, but they will increase by double-digits in others like Florida, Nevada, Virginia and Tennessee.

Next year, some customers will face real sticker shock because of bizarre complexities of the law. Those who signed up for ACA coverage in the first enrollment season can be automatically enrolled in the same plan next year, if they take no action.

But there’s a catch. More than 85 percent of them are receiving taxpayer subsidies, and the biggest subsidies are tied to a “benchmark” plan, which can change every year.

If people automatically re-enroll in the plan they choose for this year, it may not be the benchmark plan next year. As a result, these consumers will lose added subsidies. Milliman says they could face net premiums 30 percent to nearly 100 percent higher next year.

The ACA’s supporters argue rate increases aren’t important because the great majority of those enrolled in the exchanges get federal subsidies. But those subsidies aren’t free. They are paid by taxpayers. The overall cost of coverage matters.

The ACA requires plans to cover a long list of “essential benefits” and comply with other federal mandates. Millions of policies were canceled because they didn’t comply, and consumers were forced into more expensive plans.

The Manhattan Institute says average premiums for ACA-compliant plans purchased by individuals initially increased by 41 percent. Next year’s premium increases are on top of this higher baseline. Healthy young males face the steepest hikes.

And premiums tell only part of the story. The average deductible for a typical family plan in the exchanges is $6,078.

That’s what consumers must pay on top of their premiums before the insurance pays. Many say these out-of-pocket costs are so high they can’t afford to see a doctor, buy their medications, or get needed surgery. Some hospitals are requiring the deductible be paid up front before admission.

Many citizens whose income increased during the year could face a big tax bill if they received a bigger subsidy than they were eligible for. Uncle Sam will come calling and require them to pay back thousands of dollars.

So, no, the Affordable Care Act is not more affordable. Whether people have employer, exchange or individual coverage, they are feeling the law’s impact in higher premiums, sky-high deductibles and tax penalties.

Posted on the Boston Herald, October 4, 2014

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