Tag: cost-shifting

Cost-Slashing? No, Cost-Shifting.

Here’s a poor, unsuccessful letter I sent to the editor of the Los Angeles Times:

Three and a half million Californians may become eligible for subsidized private health insurance in 2014 under ObamaCare [“3.5 million Californians would be eligible for healthcare tax credits, study finds,” October 6], but those subsidies will not “slash the cost” of their health insurance.  As ObamaCare causes health insurance premiums to rise by as much as 30 percent, the private-insurance subsidies will shift those costs to taxpayers.  A bipartisan majority of Americans opposes ObamaCare in part because such shell games increase costs rather than reduce them.

ObamaCare Regs’ Effect on Uncompensated Care Overblown

An Obama administration “fact sheet,” released alongside the interim final rules for several of ObamaCare’s cost-increasing mandates, claims those mandates will reduce the “hidden tax” imposed by uncompensated care:

By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013.

According to research by the Urban Institute, that “hidden tax” isn’t very large:

Private insurance premiums are at most 1.7 percent higher because of the shifting of the costs of the uninsured to private insurers in the form of higher charges.

As the Congressional Budget Office repeatedly lectures Congress, “Uncompensated care is less significant than many people assume.”

Likewise, these mandates’ effect on uncompensated care will be less significant than the Obama administration would like you to think.  Using data from the Centers for Medicare & Medicaid Services and a reasonable assumption of 6-percent annual growth, total private health insurance premiums in 2013 will be in the neighborhood of $1.1 trillion.  So the administration is boasting that these mandates will reduce the 1.7-percent “hidden tax” imposed by uncompensated care to 1.61 percent.

Indeed, the whole of ObamaCare may not do much to reduce the “hidden tax” of uncompensated care. After Massachusetts enacted a nearly identical law, the Urban Institute reports, “high levels of emergency department (ED) use have persisted in Massachusetts. Specifically, ED use was high in Massachusetts prior to health reform and has stayed high under health reform.”  A lot of uncompensated care comes in through the ED.

Finally, notice how a 1.7-percentage-point premium surcharge is a bad thing if President Obama is ostensibly rescuing you from it, but a good thing if he’s imposing it on you.