by James A. Bacon
Katie Demeria ran an article in the Richmond Times-Dispatch today quoting data from the Kaiser Family Foundation and the Health Research and Education Trust showing a positive trend in health insurance premiums. In Virginia, premiums for employer-sponsored health plans grew an average of 4.8% per year from 2010 to 2015 compared to 7.6% from 2000 to 2010.
Demeria quoted Aviva Aron-Dine, a senior counselor with the Department of Health and Human Services, as saying in a news conference touting the report: “Since the Affordable Care Act was passed, we’ve experienced five of the slowest growth periods reported since Kaiser started doing its survey.”
Aron-Dine’s remarks calls to mind Mark Twain’s famous adage about lies, damn lies and statistics. It takes a special kind of audacity to credit Obamacare with slowing increases in private health plans even as Virginia insurers were requesting weighted average price hikes of nearly 18 percent for plans offered on the Obamacare health exchanges in 2017.
As far as I can see from perusing the Web, Aron-Dine has not identified a mechanism by which Obamacare regulations positively impacted the private health care marketplace. If she’d said that Medicare or Medicaid cost increases were moderating thanks to Obamacare, she would have at least a fig leaf of plausibility because those programs, after all, are designed and funded by the government. But she offers no more than a coincidence in time — the implementation of Obamacare occurred in the same years as private premiums were slowing — to justify her insinuation about market-based plans.
Ironically, the Kaiser Foundation itself explained in its report what is really responsible for the slowdown in private premium increases — private companies have been shifting aggressively to health plans with high deductibles and Health Savings Accounts.
Forcing employees to eat higher deductibles does two things. First, it lowers the company’s exposure to health care costs because employees are covering the first $1,000 in medical expenses (as see in the chart above), not the employer. That lowers the cost basis used to establish insurance premiums. Second, when employees pay for health care out of their own pocket, they are more selective about visiting the doctor and taking tests, which reduces costs. Third, Some companies are coupling these policies with wellness campaigns and resources to help employees shop around for better prices on discretionary procedures.
A couple of points to note: While increases in health care premiums may be slowing, that doesn’t mean that total payments, including out-of-pocket, are. Kaiser did not provide total-payment data. Nowhere is the tradeoff between premiums and out-of-pocket expenses clearer than the Obamacare health plans themselves, many of which increase deductibles as a way to offset higher premium.
While the Affordable Care Act does contain measures to contain exploding health costs, such as incentives for hospitals to reduce re-admissions, it also is accelerating the cartel-ization of hospitals, physicians and other health providers and, in response, the cartel-ization of health insurers. Economic power in the health care industry is more concentrated and less competitive than ever before.There are currently no comments highlighted.