There is a shock awaiting at least 19 million Americans when their 2017 individual healthcare insurance bill arrives in the next two weeks.
In fact, individuals will see up to $3.75 billion dollars swept out of their pocketbooks and into the coffers of healthcare insurance companies. Here is how we arrived at that figure, which is actually very conservative and does not take into account family premiums which are higher.
We took 2016 rates from Health Pocket to arrive at a low-ball figure for the average individual purchasing their own healthcare insurance. Government and private analysts estimate there are nine million Americans in this sector. Then, we reduced the total by one million who for various reasons including have grandfather policies or other ways of reducing their expenditures. We then took an average of 13% as the rate of increase. The result:
|Total Purchasers of Individual Policies Not on Exchanges||8,000,000|
|Average Yearly Premiums 2016||$3,600|
|Estimated Total Purchasers Dollars||$28,800,000,000|
|Estimated Percentage Increase||13%|
|Total New Healthcare Expense||$3,744,000,000|
Nor will employees of many small businesses be happy with next year’s healthcare insurance premiums. Owners face 20-30% increases in their premiums. Businesses are mitigating some of their costs by passing them on to employees, upping the deductible, or self-insuring which is growing as an alternative. In any case, individuals are the ones who will be paying more.
In some states, new individual policy rates are 30% higher than last year. In New Mexico policies will be up 93% if purchased on the government exchange, according to published reports.
But according to Washington bureaucrats (who say) don’t worry the US government is here.
The word from the nation’s capital is that 10 million people using government sites will be subsidized.
Government officials are telling these millions of Americans they will not pay full price for their healthcare insurance. In fact, officials argue the cost will be as low as $75 a month.
Ergo, they say the increases won’t be so bad.
What they don’t say is: Who will pay for the subsidies?
No matter which pocket they come from, the subsidies are being paid with tax dollars.
Equally as important, they are taking additional hard earned after tax dollars from the nine million Americans who will pay increased premiums for non-exchange purchased individual healthcare insurance coverage.
If this was President Obama’s plan to drive them to the exchanges, so far it has not worked.
At the same time, healthcare insurance companies are reeling from the impact of higher than anticipated medical usage, unprofitable priced plan offerings, and lack of sign-ups by young people.
One key factor of the unprofitable plan, many experts say, is Obamacare’s mandate prohibiting denial of coverage because of pre-existing conditions. Far more than corporate officials will publically admit, this mandate has up-ended the healthcare insurance industry and possibly put it on a course for a slow, spiraling death. Something some critics say was President Obama’s plan all along.
For the moment, the ones paying the bill are the American people in the form of higher premiums and fewer options.
Companies such as UnitedHealth and Humana have withdrawn from most government exchanges. In the rush to join, the number of Americans with pre-existing healthcare needs overwhelmed the insurance companies. Although expecting a rush, they anticipated that younger, healthier individuals would supposedly balance this influx.
As many experts predicted, this did not happen. The result, the Administration has scrambled to plug holes in the law through massive infusion of funds from other budget allocations. But sometimes, even that doesn’t work.
Authorized subsidies to cover losses by healthcare insurance companies and help them make the transition in Obamacare mandates have been cut and delayed. It is another bandage on the creaky structure as the administration tries to salvage the Affordable Care Act (ACA).
Suffering massive losses, some healthcare insurance companies are now suing the government for the promised funding to cover their losses. The administration is offering only 10% of mandated funding and that is a year late.
Another attempt to jump start the law involved a program rife with cronyism. Specialized cooperatives funded by billions of dollars through government loans have for the most part disappeared. The monies were given to favored Washington groups, most of whom had no experience in the healthcare industry. Government accountants have already written off 60% of these loans and expect to add more write-offs in the next fiscal year.
Careful examination of internal government spending allocated for the ACA has shown a cavalier disregard by government officials for congressional spending directives as the administration shifted funds to cover Obamacare shortfalls.
Already winding their way through the courts are lawsuits charging the administration with illegal infraction of the ACA.
Given the billions of dollars spent to balance Obamacare competing requirements, the past five years have shown just how much tinkering with healthcare can disrupt an industry that is one-fifth of our country’s total economic activity.
Left out of the equation are the effects these changes have had on the nine million Americans who buy individual healthcare policies and are getting the same price increases. Only, they will not receive any government subsidies.
At the same time, many small businesses are finding healthcare costs for an employer sponsored plan are up by substantially. There are an estimated 22 million Americans in this sector with about 52% covered by some form of company plan.
Government officials say this is a critical transition year for healthcare and everything will work out.
But the record proves otherwise.
From the beginning, Obamacare was predicated on a careful balance of industry acceptance of changing enrollment, government subsidies, tax penalties, and young, healthy participants. That last assumption has proven false as young people either stayed on parental plans or opted to pay the tax penalty.
None of these factors has played out as planned and the ACA is, as leaders of both parties agree, in need of changes. Given the disruption in Washington, agreement will be difficult, if not impossible.
Sold as a way of reducing the number of Americans without healthcare insurance, the goal has so far proven elusive.
Economists call programs such as welfare, healthcare subsidies, Medicaid, etc. income redistribution.
Some critics argue Obamacare is a way for the Democratic Party can achieve its goal of a one-payer healthcare system.
President Obama made passage of the ACA law a cornerstone of his administration. He also carefully put most of its tougher mandates to become effective for after he left office. The next President will need to face the wrath of Americans who can no longer see their doctor of choice or keep their plan.