Remember when the President promised that Obamacare would reduce the cost of health 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 law, like Romneycare in Massachusetts, would magically eliminate the mythical “free-rider problem” by massively subsidizing health spending for the lower middle class.

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

Here is a chart that the Office of the Actuary published 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 Obamacare:



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 health 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 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 insurance plans, which comes into effect in 2018. As I’ve written many times, a law that solely consisted of equalizing the tax treatment of employer-sponsored and individually-purchased health plans would have done more for health reform than the entirety of Obamacare.

Unfortunately, that’s not how it played out. Instead, we doubled down on a failed system of subsidies, mandates, and controls. 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.”

You mean when Fox News passed the memo to call Obama's health care reform as ObamaCare, people outside of Fox News actually listened? Sorry, I can't take some of you seriously.

While it's obviously not a good thing that the cost of healthcare is predicted to increase over the next few years, it's still just a prediction. Even if it does prove to be more expensive, it will still most likely increase the percentage of the population that has access to healthcare. That is at least partly a victory.

Also, government-sponsored healthcare isn't a new idea: http://healthcarereform.procon.org/view ... eID=004182

bartoron

Even if your goal is to increase the percentage of the population that has access to healthcare (which is not a right, might I add)

Why shouldn't it be a right, who are you to say that someone doesn't deserve to live a healthy life just because they can't afford a certain procedure, or some kind of medicine?

Millions of new people on the rosters? This isn't exactly a surprise, but I'm not sure it means what you think it means.

I'm not ignoring anything, and I do agree with you that people should not have to acquire health insurance if they do not want it. Take off your blinders and pay attention to what I am actually saying, please.

I'm glad you agree that people should not have to acquire health insurance if they don't want it.

To clear things up, I wasn't saying you were ignoring the details. That was rhetorical and aimed at anyone who does ignore the details and insist that more people on healthcare is automatically a win/win situation.

Why will it grow so much? I'm still trying to figure exactly that out, but the system is complicated with a 2,000 page bill that few people have read, including the people who passed it. I would assume part of it would come from taxes involved in the bill. Perhaps basic elements of supply and demand might even be involved.

↵e Net cost of health insurance is calculated as the difference between calendar year premiums earned and benefits paid for private health insurance. This includes administrative costs, and in some cases, additions to reserves; rate credits and dividends; premium taxes; and plan profits or losses. Also included in this category is the difference between premiums earned and benefits paid for the private health insurance companies that insure the enrollees of the following public programs: Medicare, Medicaid, Children’s Health Insurance Program, and workers’ compensation (health portion only).

Very good point. I would have imagined an increase in coverage to lead to more demand in goods and services involved in the entire healthcare industry, which the supply would have to adjust to to reach equilibrium. If supply were not adjusted enough, price would go up.

I fail to see how this invalidates what the article is saying.

Average annual growth in national health spending is expected to be 0.1 percentage point higher (5.8 percent) under current law compared to projected average growth prior to the passage of the Affordable Care Act (5.7 percent) for 2010 through 2020. Simultaneously, by 2020, nearly thirty million Americans are expected to gain health insurance coverage as a result of the Affordable Care Act.

I'm skeptical that the premiums are the only things being factored in here.

Oh, so predictions with solid reasoning behind them are dismissable because they're just predictions? Alright then, I'll dismiss any Leftist predictions that show just how evil and/or terrible a conversative idea is and how wonderful and right a liberal idea is. They're just predictions, right?

Net cost of health insurance is calculated as the difference between calendar year premiums earned and benefits paid for private health insurance. This includes administrative costs, and in some cases, additions to reserves; rate credits and dividends; premium taxes; and plan profits or losses. Also included in this category is the difference between premiums earned and benefits paid for the private health insurance companies that insure the enrollees of the following public programs: Medicare, Medicaid, Children’s Health Insurance Program, and workers’ compensation (health portion only).

What this does demonstrate is that actual treatment costs are going to decline as a percentage of insurance companies' premiums received. The government expects their combined ratio to shoot through the floor, and that probably isn't coming from administrative. Their loss ratios will be even better, if the government is right about this. Afterwards, their profits will fall back more towards historical levels.