Will medical insurance be more affordable under reform? New report shows triple digit growth rate. « Health Insurance Advisory

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new healthcare reform lawThe new healthcare law, called the Patient Protection and Affordable Care Act (PPACA), represents comprehensive healthcare reform legislation signed into law on March 23, 2010. It contains numerous provisions designed to protect consumers and promote low cost medical insurance, including many new taxes to pay for the cost.

In this section of the site, you can also obtain the following information specific to your state: available medical insurance options, efforts to regulate medical insurance premiums, healthcare, the individual medical insurance marketplace and the new healthcare law.

Our objective is to help Americans make sense of the new healthcare law by explaining key provisions in plain English and assisting individuals, families and the self-employed in using this information to find and secure affordable medical insurance.

Will medical insurance be more affordable under reform? New report shows triple digit growth rate.

Author: Administrator | Aug 23 2011 | Premium Increases - New Healthcare Law

Remember when President promised the new healthcare law, called the Patient Protection and Affordable Care Act (PPACA), would reduce the cost of medical insurance? “Under [our] plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year,” said Obama in 2008. The new healthcare law, like Romneycare in Massachusetts, would magically eliminate the mythical “free-rider problem” by massively subsidizing health spending for the lower middle class.

The Office of the Actuary in the Centers for Medicare and Medicaid Services recently put out its annual projections of national health care spending. Contrary to the President, the actuaries find that the new healthcare law will dramatically increase the near-term growth rate of health care costs. In 2014, the actuaries find that growth in the net cost of medical insurance will increase by nearly 14 percent, compared to 3.5% if PPACA had never passed. The growth rate of private insurance costs will rise to 9.4 percent, from 5.0 percent under prior law: an 88% increase.

The following chart was published by the Office of the Actuary in the July 2011 issue of Health Affairs. The blue bars represent the Office’s projected spending growth under prior law, and the red bars represent the growth under the new healthcare law:

Healthcare cost pre and post new healthcare law Will medical insurance be more affordable under reform? New report shows triple digit growth rate.

The Office of the Actuary does project that growth in private premiums will moderate a bit after 2014, but for reasons the Obama administration won’t like, given its recent harassment of McKinsey & Co.

For 2015–20, growth in private medical insurance premiums is expected to slow somewhat and average 5.6 percent annually. Underlying this expectation is that some employers of low-wage workers will stop offering health coverage (and many of their employees will move to the health insurance exchange plans, while others move into Medicaid or become uninsured).

There is another provision of PPACA that the Office of the Actuary believes will help reduce health spending: the “Cadillac tax” on high-cost medical insurance plans, which is effective in 2018. Most critics argue, however, if a tax aimed at equalizing the tax treatment of employer-sponsored and individually-purchased health plans was implemented it would have done more for health reform than the entirety of Obamacare. Encouraging more health spending is not the way to curb its growth. As P.J. O’Rourke memorably put it in 1993, “If you think health care is expensive now, wait until you see what it costs when it’s free.”

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