Health Care Costs On The Rise
Gary Gerard, dumbhoosier.com
As someone who works at a small business, I can say with certainty
that health care insurance premiums are on the rise.
Over the past two years we have seen double-digit increases.
And no wonder.
A recent study by the Health Care Cost Institute noted that higher
prices charged by hospitals, outpatient centers and other providers
drove up health care spending at double the rate of inflation.
And this was amid a weak economy when patients consumed less medical
care overall.
The study showed prices rose at least five times faster than overall
inflation for emergency room visits, outpatient surgery and
facility-based mental health and substance abuse care from 2009 to
2010.
But weren’t we told prices and premiums would fall?
Well, you know you’re in trouble when the architect of Obamacare
comes out and says straight up, essentially, “Remember when I told
you health care premiums would go down? I lied.”
Earlier this year Johnathan Gruber, an economist from the
Massachusetts Institute of Technology, totally backtracked on the
analysis he gave the White House in support of Obamacare.
(Gruber is the same guy who helped craft Romneycare in
Massachusetts.)
Basically, he now says insurance premiums will dramatically increase
under the reforms.
Nice, eh?
As reported by the Daily Caller, officials in Wisconsin, Minnesota
and Colorado in 2011 ordered reports from Gruber. When they got the
reports, Gruber was serving up a totally different – albeit much
more accurate – picture of health insurance premiums and health care
costs under Obamacare.
You may remember the President telling us in September 2010 that,
“As a consequence of the Affordable Care Act, premiums are going to
be lower than they would be otherwise; health care costs overall are
going to be lower than they would be otherwise.”
Gruber’s new report is in direct contrast with those notions. In
2009, Gruber said that based on figures provided by the independent
Congressional Budget Office, “[health care] reform will
significantly reduce, not increase, non-group premiums.”
Not so much.
Gruber told Wisconsin officials: “After the application of tax
subsidies, 59 percent of the individual market will experience an
average premium increase of 31 percent.”
He said that’s because about 40 percent of Wisconsin residents
covered by individual market insurance don’t meet the Affordable
Care Act’s minimum coverage requirements. So under the Affordable
Care Act, they will be required to purchase more expensive plans.
And remember, this is not some partisan hack saying this stuff. It’s
the architect of Obamacare.
Couple this with a report I ran across this week in the
Washington Examiner.
Here’s the lead:
Business owners will pay $4 billion more in taxes under President
Obama’s Affordable Care Act (ACA) than the Congressional
Budget Office had previously expected.
Oops.
Seems the amount of deficit reduction from penalty payments and
other effects on tax revenues under Obamacare will be $5 billion
more than previously estimated, the CBO report says.
The report notes: “That change primarily effects a $4 billion
increase in collections from such payments by employers, a $1
billion increase in such payments by individuals, and an increase of
less than $500 million in tax revenues stemming from a small
reduction in employment-based coverage, which will lead to a larger
share of total compensation taking the form of taxable wages and
salaries and a smaller share taking the form of nontaxable health
benefits.”
So basically, the CBO is saying the Obamacare tax burden just went
up by $4 billion for businesses and somewhere between $1 billion or
$1.5 billion for individual workers.
Of course, none of this surprises me. All along, experts were saying
that Obamacare cost estimates were way off.
And even though it’s not surprising, it’s highly unsettling because
this stuff just wreaks absolute havoc on the economy.
That’s because the cost of higher insurance premiums invariably and
unavoidably get passed on to workers.
Workers’ paychecks shrink because of increased premiums as employers
try to offset the costs of their plans. On top of that, employers,
generally find the need to reduce coverage to offset rising
premiums.
Policy changes like raising deductibles or raising the amount of
co-pays boosts out-of-pocket costs for employees. That’s precisely
what’s happening all over this great land and it is only going to
get worse.
Of course, this hits working-class folks – people who work hard,
play by the rules and pay their bills – the hardest. That’s because
these people will do whatever they have to do to get their bills
paid.
When paychecks shrink and more disposable income goes toward keeping
your kids healthy, that means less money to buy stuff.
And we all know that people buying stuff is what makes the economy
better.
Beyond the obvious effect rising health care and health insurance
costs have on the economy, there is the uncertainty factor.
Employers simply don’t know what to expect. They don’t know how this
is going to affect the bottom line. There seems to be this sense of
an ominous Obamacare cloud hanging like a pall over small
businesses. They’re not going to invest. They’re not going to
capitalize. They’re not going to hire people.
As long as this is going on, how does the economy turn around? And
we’re only talking about health care. What about the housing market?
The banking industry?
I have a friend who has a small business in town. We were talking
last week and he said something I hadn’t considered. I always assume
that sooner or later, things will get better. America endured a
depression. There have been recessions and economic slowdowns.
Things always get better.
My friend said, “What if this is the new ‘good’? What if it doesn’t
get any better than this?”
I am hoping against hope that’s not the case.
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