• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Side Effects: It’s Official- Higher Health Care Costs

    Yesterday, the actuaries at the Centers for Medicare and Medicaid Services (CMS), the agency that runs the giant entitlement programs, released their analysis of the new health care law. The AP reports that “White House officials have repeatedly complained that such analyses have been too pessimistic and lowball the law’s potential to achieve savings,” but the official CMS analysis reinforces several of Heritage’s predictions regarding Obamacare.

    Some highlights of the CMS report:

    • Mandates Without Impact. Writes CMS, “For many individuals, the penalty amounts for not having insurance coverage were not sufficiently large to have a sizable impact on the coverage decision” (p.7). Concerning employers, “the penalties would not be a substantial deterrent to dropping or forgoing coverage” (p.7). So these provisions will do little to achieve their purpose, i.e., to encourage individuals to carry coverage and employers to offer it.
    • If You Like it, You May Still Lose it: CMS reports that about 14 million Americans will end up losing their current employer-sponsored coverage. Though many will instead receive coverage in the exchange, this shows that instead of encouraging employers to offer coverage, new law creates incentives to dump the responsibility of their employees’ health care onto taxpayers.
    • Increase Medicare Solvency? Don’t [Double] Count on it. Estimated savings for Medicare Part A would be substantial enough to extend the program’s solvency to 2029 — under prior law, funds would be exhausted by 2017. However, CMS writes, “In practice, the improved HI financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions) and to extend the trust fund…” (p.9). Savings from Medicare will fund newly created programs — not reduce the program’s future unfunded liabilities.
    • Medicare Savings (if they occur) Mean Bad News for Seniors. Medicare hospital payments will grow at a slower rate than the cost of providing services, such that “… providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention [think doc fix], might end their participation in the program (possibly jeopardizing access to care for beneficiaries)” (p.10). As far as changes for Medicare Advantage enrollees, CMS reports that “new provisions will generally reduce MA rebates to plans and thereby result in less generous benefit packages … in 2017 … enrollment in MA plans will be lower by about 50 percent …” (p.11).
    • New Federal Programs Born to be Bailed Out. The CLASS Program will offer long-term care insurance, but enrollees will pay premiums (which are, by the way, counted as an offset to the overall cost of the bill) for five years before benefits are attainable. This program is doomed from the get-go: CMS reports that “… voluntary, unsubsidized, and non-underwritten insurance programs such as CLASS face a significant risk of failure as a result of adverse selection by participants … there is a very serious risk that the problem of adverse selection will make the CLASS program unsustainable” (p.15).
    • Bending the Spending Curve UP? CMS reports that under new law, overall national health expenditures will increase by $311 billion. This is the net result of increases in coverage and decreased spending from reductions to Medicare and due to the excise tax on Cadillac insurance plans. Expect this figure to rise if Congress indefinitely postpones unsustainable Medicare cuts (again, think doc fix) and yields to political pressure to ax the Cadillac tax, both of which will likely happen. Comparative Effectiveness may have a small effect on reducing the growth of health care costs, but, writes CMS, “We show a negligible financial impact over the next 10 years for the other provisions intended to help control future health care cost growth” (p.13).

    Bottom Line: A health care law that will be costly to taxpayers, burden businesses, and create more problems than it solves. Follow the side effects of Obamacare here.

    Posted in Obamacare [slideshow_deploy]

    8 Responses to Side Effects: It’s Official- Higher Health Care Costs

    1. Bllie says:

      Of course. And because it is so outrageously beyond the promise of what obama proclaimed it would do, should be grounds for investigation. Personal Health is high priority and not acceptable to put in the hands of people who abuse their authority, causing a potentially dangerous intent!

    2. taramila says:

      Under Health Care Reform, Health insurance is a must, but now you can easily find health insurance for $40 http://ow.ly/1AqF1

    3. Pingback: Shopfloor » Blog Archive » Bending the Health Care Curve Over, Under, Sideways, Down

    4. Pingback: AntiObamaBlog.com » Side Effects: It’s Official- Higher Health Care Costs

    5. Pingback: Morning Bell: The Obama Fiscal Responsibility Farce Continues | The Foundry: Conservative Policy News.

    6. Pingback: The Obama Fiscal Responsibility Farce Continues | Citizen Gravity

    7. Pingback: Still An Issue Of Trust For Obama Administration « The Lunch Counter

    8. Gerald Poe, Los Ange says:

      Please breakdown the cos spread and benefit/requirement of sho must participate? i.e.: federal, state, local government employees, all lawmakers, individuals, companies, etc.

      It is a bit difficult to accept the costs and losses we will experience, let alone seeing those mandated ot participate and those that are not mandated participation.

      Thank you,

      Gerald Poe

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.