The writer, of Omaha, is executive director of the Platte Institute for Economic Research.
As Congress debated health care reform in 2009 and 2010, the Platte Institute warned about the increased costs to consumers. This law has a huge financial burden attached to it, from increased state and federal spending for Medicaid expansion to increased premiums for those on the private insurance market.
The increased premiums for private consumers are particularly concerning since President Obama assured Americans at the time that their private insurance would not be affected if they were happy with it.
Americans have been led to believe that everyone will benefit from the law passed by Congress in 2010. On paper, a lot of the changes made by the law even sound like they could provide only benefit to consumers — such as eliminating the consideration of pre-existing conditions and gender, and limiting how much of a factor age can be when determining rates.
Unfortunately, when you look deeper into the impact of these changes, they no longer even look good on paper.
Individuals who had health insurance prior to the passage of the federal law may be affected in several ways. First, previously uninsured people who have a pre-existing condition will now be allowed to obtain insurance at the same cost as those already insured. Bringing these people into the insurance pool at the same cost will inevitably lead to an increase in premiums for previously insured individuals. It also means that previously uninsured people who are healthy will be purchasing insurance at a higher rate than they would have before the reform legislation.
One common misconception about the law is that if you already had health insurance, your insurance would not change. However, because the law increased the list of items that are required to be covered, this may not be the case. You may have been perfectly happy with your existing coverage, but it may still change because of these new requirements. This also will lead to higher premiums.
This is one of the great problems with the federal health care reform law — it removes consumer choice from the equation. Small businesses that could barely afford health insurance for their employees before will now find it even more difficult.
Americans who purchase their coverage individually, and not through an employer, may be impacted the most. This is because it is estimated that most of these individually purchased plans do not meet the new federal requirements. Given the fact that these individuals have chosen their existing plans for themselves, it does not make sense that we would force additional requirements onto them. Individuals know much better what coverage they need, and losing that flexibility will cost them more money.
Unfortunately, the federal government has decided it should force broader coverage for things like mental health care, substance abuse treatment and maternity. Many individuals who do not need these things to be covered will still be forced to pay for them.
Younger insurance consumers will also likely see an increase in premiums. The federal law has set limits on the rates for older consumers. Under the new law, insurance premiums for older customers cannot cost more than three times the rate for younger customers. This will hit people in their 20s and 30s the hardest — and oftentimes these are the people who can least afford it.
Perhaps the most blatant change that will affect insurance costs for everyone is the new health care tax. You don’t have to be an economist to understand that taxing a business means it must increase the cost of its products to pay for that tax. This will affect all of us who have private health insurance.
For proof that the Affordable Care Act is actually making health insurance less affordable, look no further than the news coverage of companies making changes to their employee benefits. UPS recently announced it will no longer cover the benefits for their employees’ working spouses who can obtain insurance through their own employer. Other companies have announced they will reduce their full-time workforce and have more workers who work less than 30 hours.
Ensuring that everyone has access to health care coverage and health care services is a noble goal. But it’s important that everyone understands how these changes will affect us individually. Unfortunately, that means many of us will be paying more to maintain our health insurance.