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Is a New Obamacare Crisis Ahead?

It has been five years since President Obama signed his landmark but highly controversial health care reform bill into law. There have been many setbacks along the way including massive technology problems, and a Supreme Court ruling in 2012 that struck down the requirement that all states expand Medicaid leaving only 28 states and the District of Columbia agreeing to offer that coverage. This change was a major blow to the law’s goal of offering universal health insurance to all Americans. Nevertheless, there have been undeniable gains towards universal coverage. The share of the nation’s uninsured has dropped to 12.3% for the first two months of 2015, down from 17.1% in late 2013 before the insurance exchanges began. Roughly 5.7 million young adults are now insured because of the law’s requirement that adult children can stay on their parents’ plan until age 26. Free preventative care has expanded, and new ideas are being explored to incentivize doctors for keeping patients healthy as an alternative to traditional “pay for procedures” approach – Obama Successes.

Even with these accomplishments, recent polls show that 49% of Americans disapprove of Obamacare, while only 39% approve (Polls). The biggest reason is not a matter of political philosophy, but rather, the costs. There is a relatively large consensus among experts that Obamacare failed to offset the costs of subsidized health insurance for the sickest with cost cutting measures that have any real teeth. These reasons are spelled out in great detail by Steven Brill, a highly respected investigative journalist, in America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System (Bitter Pill). Whether the President can be blamed for this or not depends on one’s point of view; however, agreeing to the demands of pharmaceutical companies, health insurers, medical device manufacturers and hospitals to take out many of the cost containment measures in the final Obamacare bill was the only way to get it through Congress.

In 2015, the first year of health care insurance premium increases following a full year of Obamacare, the modest increases over 2014 were hailed by Obamacare fans as proof that fears of high increases were unfounded. Unfortunately, 2016 sticker shocks suggests that the celebrating was premature. The new rates, published on June 2nd, show increases ranging from an average of 10 to 30% in most states (Sticker Shock). This average includes a sprinkling of rates in some states where the increase is a whopping 60 to 70%!

Insurers say they need this level of rate hikes because enrollees are going to the doctor, getting lab work and filling prescriptions more than had been anticipated. “We’ve seen a great pent-up demand for services,” said Aaron Billger, spokesman for Highmark, a Blue Cross Blue Shield licensee offering plans in Pennsylvania, Delaware and West Virginia. Enrollees in Obamacare exchange plans use more healthcare than those in job-based policies, he noted (Sticker shock).

If Obamacare survives the immediate risk of a Supreme Court ruling that all states must set up their own health insurance exchanges (currently less than half the states currently have their own), Obamacare is going to have to weather the crisis of skyrocketing premiums if it is to survive. There is some hope that these rate hikes will not be the new pattern. The annual penalty for being uninsured is increasing every year. If that leads to an increased number of young, (healthy) enrollees then the costs of the previously older, (sicker) patients may start to be offset. Whether that will happen is uncertain. If the 2017 increases announced at this time next year are as large as this year’s, then presidential candidates are going to face intense pressure to outline a plan to deal with these costs if elected.

It seems to me, most Americans would prefer serious cost containment over getting rid of Obamacare. Given the political resistance to a single payer model, the next President will have to come up with creative ways for government to have a much larger say in medical pricing than currently allowed. Many parts of the health care system are making higher profits than ever under Obamacare. Allowing this to happen, while the middle class absorbs increases it cannot afford, is wrong and we have to hope the next President will have the will and the political skill to make it right.

Robert Hoyt, Ph.D.
Allied Health Professionals LLC

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