As we told you. When you start mandating coverage and benefits, the costs to provide care will increase. As such, health care insurance premiums go up. Remember, insurance companies in most cases must go to the state to request premium increases and they must prove why rates must increase. They states will soon be approving 20 percent-plus increases for some policies.
As a companion piece to my health care trade-offs post more than two weeks ago, The Wall Street Journal has another article today discussing the premium increases that are starting to hit businesses now that the legislation is law, and open enrollment season is around the corner.
Read the headline again. Then, think about the written and spoken attacks on health care insurance companies from Congress, pundits and directly from the president. This industry is a convenient and popular target for the left, just like oil and banking firms with their $3 gas and $2 ATM fees.
In his recent “pep talks” about Obamacare, the President has frequently mentioned the Congressional Budget Office’s findings to support his arguments. As I have read those findings, as well as those of the Office of the Actuary for Medicare and Medicaid (OACT) I am perplexed by the President’s comments.
We are told that Obamacare will reduce everyone’s premiums. Here is what the CBO actually said:
CBO found that premiums in the individual market will rise by 10% to 13% more than if Congress did nothing. Family policies under the status quo are projected to cost $13,100 on average, but under ObamaCare will jump to $15,200.
We are told that Obamacare will not only be deficit neutral, but, will actually create a $139 billion dollar surplus over ten years. The only problem with that statement is that the Senate bill does not include what is known as the “doctor fix”. Although originally in all versions of Obamacare, it has been dropped from the final Senate version. Why? Because it will add $250 billion to the cost of Obamacare, making the bill not only not deficit neutral, but, in fact, a $110 billion deficit over the first 10 years. Not to worry, docs, the “doctor fix” is now in a separate bill.
Here’s what the OACT says could happen if the federal government doesn’t update it’s payment rates to doctors:
Over time, a sustained reduction in payment updates…would cause Medicare [and Medicaid] payment rates to grow more slowly than…the providers costs of furnishing services to beneficiaries. Thus providers…could find it difficult to remain profitable, and might end their participation in the program…possibly jeopardizing access to care…
Another reason President Obama can claim the bill to be “deficit neutral” over the first 10 years is because of the new federal disability program (CLASS) contained in the Senate bill. It will begin collecting premiums in 2010, but would not have to pay out any claims until 2015. In the interim, those premiums are counted as “income” to defray the cost of Obamacare. Here’s what the OACT had to say about CLASS:
…we estimate a net federal savings for the CLASS program of $39 billion during the first 9 years of operation-the first 5 of which are prior to the commencenent of benefit payments…in 2025 and later, projected benefits exceed premium revenues…
We are also told that Obamacare will actually reduce the amount of money spent in this country on health care (i.e., bend the cost curve). Not so, according to OACT. By 2019 under Obamacare we will be spending 21.1% of our GDP on health care, versus 20.8% without Obamacare.
And, finally, President Obama says that Obamacare will extend the life of Medicare, now set to go broke in 2017, by five more years. It won’t, according to a letter from the CBO. That letter explains to Congress that it can’t cut $500 billion from Medicare and claim to have extended Medicare’s life by 5 years, while simultaneously using that same $500 billion to insure those who are currently uninsured.
I don’t usually write a post of this length, but, I am growing increasingly tired of hearing claims that are, charitably, well, just untrue.