The Affordable Care Act threatens the private insurance system because high premiums will drive healthy people out of the marketplace, a speaker said Wednesday in Omaha.
The pool of insured people will become older and sicker, sending premiums ever upward, predicted Michael Tanner, a senior fellow with the Cato Institute, a Washington, D.C.-based think tank that argues for individual liberty, limited government and free markets.
People ask what the Affordable Care Act, which has been dubbed Obamacare, will cost, he said. “The short answer: A lot.”
Tanner's message wasn't rare in the 2013 Health Care Summit, sponsored by the Platte Institute for Economic Research. That think tank describes its mission as advancing policy alternatives that promote limited government, personal responsibility and free enterprise in Nebraska.
Insurers and company heads warned that health insurance costs and premiums will rise because of the legislation that passed in 2010 and is scheduled to be fully implemented next year. The law seeks to insure more Americans and mandates coverage to ensure that the system includes a better balance of young, healthy people as well as older, sick people. That way, costs are expected to be spread out and premiums to go down.
But with premiums for people age 30 and younger expected to shoot up, Tanner predicted that young, healthy people will simply absorb the penalty and still go without insurance. The penalty next year for many will be $95 per person, increasing to $325 and $695 over the following two years, respectively.
Ron Pollack, executive director of Families USA, said in an interview that he didn't think young people would opt for penalties over insurance and noted that many will qualify for subsidies. Contacted by phone after the event, Pollack said the subsidies available to people whose income is up to 400 percent of the federal poverty level will help draw people into the system.
“They're going to get such substantial subsidization that those costs are going to be greatly reduced,” he said. Washington, D.C.-based Families USA promotes quality, affordable coverage and care for all Americans.
Michaela Valentin, director of government affairs for Blue Cross Blue Shield of Nebraska, told the audience of about 135 at the Scott Conference Center that there's no point in hoping the law gets repealed. “I can tell you confidently that it's not going away.”
The law requires insurance plans to provide a variety of benefits, including preventive services and essential benefits. “The more you pile benefits on, the costs are going to go up,” Valentin said.
Valentin said fees and taxes associated with the Affordable Care Act will cost insurance plans and their members dozens of billions of dollars over the next few years. An excise tax on many insurance plans, for instance, will cost an estimated $73 billion through 2019, she said. Premiums connected to the law have gone up over the past two years and will continue to increase, she said.
Robert Synowicki Jr. of Werner Enterprises said his company will pay more than $1 million a year in taxes and fees related to the Affordable Care Act.
“For us, more government intrusion usually means 'bad for business,'” Synowicki said. “So we're not sure what's affordable about the law yet.”