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  • New Study Shows Higher Health Care Costs under Obamacare

    Despite President Obama’s assurances that his massive overhaul of the health care system would control health care costs and allow Americans to keep their current coverage, the outlook indicates otherwise. PricewaterhouseCoopers (PWC) recently released its annual report on medical cost trends for 2012, and it is revealing.

    The report shows health care costs and premiums continuing to rise—and uncertainty increasing for employers who offer insurance to their workers. Health care spending increased by 7.5 percent in 2010 and will grow by 8 percent this year. In 2012, it will rise again by 8.5 percent. This is exactly the opposite of the President’s promise that his health care plan would reduce premiums by $2,500 per person.

    Even steeper rises in the cost of private insurance are possible, due to Obamacare’s reductions in Medicare payment rates and its expansion of the Medicaid program. PWC writes, “Hospitals and health plan executives agree that when Medicare and Medicaid pay less than costs, private payers must make up the difference.” The new law will cut provider payment rates across the board, which Medicare’s Chief Actuary warns could cause 15 percent of hospitals, skilled nursing facilities, and home health agencies to become unprofitable by 2019. As more Americans enroll in Medicaid in place of other forms of coverage, providers will face lower reimbursement for a greater number of patients. According to the report, the impact of these changes will likely mean greater cost-shifting to privately insured patients—indirectly increasing premiums.

    Perhaps most concerning are the findings of a survey also released by PWC divulging how employers are likely to react to Obamacare. The responses do not bode well for Americans who receive insurance through their employers, and things look even worse for taxpayers. The survey showed that nearly half of employers will drop their coverage, dumping employees into the government-run exchanges. Individuals who qualify would then receive generous federal subsidies to purchase insurance. If more employers than expected dump coverage, as other experts have predicted, the cost of the subsidy program will explode deficit spending. The results of the PWC survey indicate this is likely to be reality.

    Even if employers do not dump coverage entirely under the new law, according to the survey, five out of six employers will completely re-evaluate their benefits strategy. Four out of five employers will make changes to help cover new costs under Obamacare, including raising premiums, deductibles, and co-payments.

    Employers who offer coverage to their workers face growing uncertainty regarding costs under the new law. The negative consequences of Obamacare’s changes will be threefold: higher costs for those with employer-sponsored coverage; a greater debt burden on current and future taxpayers; and slower growth in job creation and the overall economy.

    Co-authored by Kate Nix

    Posted in Obamacare [slideshow_deploy]

    15 Responses to New Study Shows Higher Health Care Costs under Obamacare

    1. Craig, Richmond says:

      Of course this is not surprising at all. Now if you can just get the GOP leaders to articulate clearly the case for market competition, maybe we could get somewhere to eventually repeal this monstrosity. Thanks!

      Craig

    2. Mark Erickson says:

      I was wondering if anyone at heritage has ever read a book called Creativecare by Dave Leonard and if they have if they think it might be a viable plan for healthcare reform. I read it and I thought it was the best idea I've ever heard. I don't know if it would work but i'd love it if you guys would have a look and comment on it.

    3. W. L. Patterson says:

      Most Americans do not want this Obamacare

      Bill. Sorry to say, but Obama is not on our side, he has an ego 10 yards long and wants to be able to control ever faucet in your and my life. The quicker he is removed from office the better off this country will be.

    4. shirley pearson says:

      I am 66. Shortly after obamacare passed my doctor had to raise his charges for office calls. He's not seeing me as often even though I have issues that need to be monitored more often. One condition had to have blood work twice in one year and I had to pay for the second one. I feel bad for my doctor because I know he wants to do better by me and he's a very good doctor. If this isn't rationed medical care for seniors, I don't know what it is.

    5. Marsha, St. Louis, M says:

      Our insurance premiums are higher and all our dedutibles have been raised. I can't afford to see my doctors except when absolutely necessary. All that money for insurance premiums and it does nothing unless, of course, you have a serious illness, which preventive care could possibly avoid. Never imagined this would happen in America. The gap between the haves and the elderly, homeless and helpless grows wider and wider and people are falling into the holes of a broken system.

    6. Barbara E. Taylor, E says:

      Although both my husband and I ARE eligible for Medicare, we do NOT use it. Why? Because his employer DOES supply our health insurance. For the record, I was 67 the end of February, and my husband, for all that he frequently works more than a 60-hour week, was 71 the beginning of this month. Yes, he did wait to apply for the SS into which he'd paid for over 40 years (he emigrated from Scotland, the old fashioned way – LEGALLY). What we have isn't great, but it's a heck of a lot better than Medicare, and I can't help thinking of his younger co-workers who are also on this plan. Although the company is headquartered in Montreal, it does have to provide for the Americans in the company – all 20 of them! Yet another way that our lives are being imploded by the Fascist in the white house! To Reagan's question: Are you better off now than you were 4 years ago – NO WE SURE AREN'T!

    7. manapp99 says:

      As insurance premiums rise more and more will forgo coverage. This will leave a smaller and smaller pool of (less healthy) people to pay for health services paid for by insurance. More and more will default on hospital bills or go into bankruptcy. The system is heading for collapse and HCR is not going to save it.

      IMHO, the path to saving the insurance business is to decouple it from employment, encourage MSA's or HSA's. Get people used to using health insurance like they do car insurance. You pay for your own doctor's visits and small ticket procedures and turn to insurance in the case of catastrophe.

    8. John Nail, Atlanta G says:

      I am a 35 year benefits industry veteran and read the PWC study in its entirety and wonder if we are reading the same study, In fact your selective reading and intrerpretation of the 2 PWC studies you refer to are grossly misleading

      Your initial assertion about PPACA reducing costs is flawed in that it doesn't even go into effect until 2014 so the long term savings for families from reform cannot be really felt until then.

      In fact the study says that 2010 was a "surprisingly low growth rate" and in its 2012 chart states that reform will have a "minimal impact on trend". this makes sense since reform takes hold fully on 1/1/2014.

      The only impact thus far of reform is over 1 million younger folks staying on their parents plans, 650,000 small businesses taking advantage of the tax credits and seniors getting help in the donut hole and free preventive care screenings. All these positive things occurred and the medical trend didn't even blip.

      While the economy is cited as the major reason trend has slowed I think that the authors and you have overlooked a more obvious long term trend which is the rapid rise in high deductible plans with HSA/HRA's. These promote consumer awareness and better use of the patients dollars – a linchpin of conservative thinking in reform and in RyanCare.

      Other studies (Mercer et al) have shown dramatic drops in cost/utilization in these types of plans. These plans have tripled – from 6% to 17%- from 2008 to 2010 as the most "predominant plan" for employers. Nearly 40% had these as options.

      Higher deductibles also cause people to postpone seeking care for simple things and reward consumer behavior.

      The cost shifting issue will be interesting to watch as that has been a constant for 30+ years and is not caused by PPACA. My sense is that in the scope of an overall systemic change this will actually be less of a factor. We will need to wait and see.

      Finally the assertion that half of employers will drop coverage and dump employees is both not supported by the study and simply inconsistent with other studies and marketplace forces. Nowhere in either PWC study is this stated or implied.

      In fact of the 19 options for dealing with costs dumping the plan wasn't on the list. Higher deductibles, HSA's and adding wellness initiatives (66%) are where employers are looking to add savings. Preventive care for all is a keystone of reform.

      Employers will not dump coverage for the simple reason that it is part of an employee's comp. package and how they compete for top talent. if they did not offer coverage they would offer a higher wage base so the employee could use the money for buying their own benefits. The move to more defined contribution (401K style or like Ryancare) than defined benefit has been marching forward for 25 years and is already prevalent in the largest orgs.

      I could go on and on concerning this thinly veiled attack on the imperfect solution of PPACA but using the facts of the expert studies you cite would be a good start for a rationale debate on the future of healthcare in the US.

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    10. Bobbie says:

      Government run health care nurses the illness, not the patient back to health. Government control manipulates situations to the benefit of government using governmental authority. We want our right to control our individual health with access to doctors who's sincerity is to heal. Please get rid of obamacare. It's an initiated crisis and danger to our health.

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    12. Dianna Lightfoot, Ma says:

      I direct a non-profit network of physicians who volunteer their time and expertise to advise and consult on health care policy issues. We would agree with all these points related to the increase in costs under Obama Care, and add this: physicians are exiting or contemplating an exist from the provider side in droves.

      Take a closer look at the U.S. Post Office or our education system and view the future suffering of America's health care under Draconian government regulation.

    13. Pingback: Americans Will Suffer Under New Obamacare Mandates - Page 6 - US Message Board - Political Discussion Forum

    14. Anonymous says:

      Hope and change, comrade!

    15. Lyla says:

      I hate that I am being required to try expensive, experimental drugs for my arthritis under Medicare. I have had it bad since I got Lyme Disease in 1971 while hiking. (no one knew what is was for a long time, but I got a Bulls Eye rash and knew that it was caused by a tick). All I need or want is some pain medication to get trhough life for $24 per month, but my doctor makes too much off the government for the experimental treatment which kills off your immune system, causes stroke, osteoporsis and a terrible wasting skin disease. AND THE TREAMENT IS NOT EVEN FOR LYME DISEASE which I need a healthy immune system to fight. But unless I take it, NO PAIN PILLS. Also I know someone with medicaid and he was forced to lose his doctor of 15 yrs. Obamacare promised you would not lose your doctor, but he did and his eye surgeon too. Governor Brown says it is because he has to expand medicaid to everyone. But Obama promised no one would lose their doctor. I think he lied. Now I hear they are planning the same HMO sign up to other doctors for Medicare too.

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