The Effect of Health “Reform:” Higher Costs
Two separate articles this morning outline how Democrats’ government takeover of health care will NOT reduce costs as promised. The Associated Press has an article noting that “Insurance premiums are likely to keep going up over the next few years. Experts predict that the law’s early benefits — such as expanded coverage for children and young adults — could nudge rates a little higher than would otherwise have been the case.” Once the coverage expansions are fully implemented in 2014, “increased demand will push up health care spending, putting more pressure on premiums.” Overall, the article gives the new law “a C minus or D for cost control” – not welcome news to many Americans struggling to pay their existing insurance premiums, and a far cry from the $2,500 in premium reductions the President promised during his campaign.
Separately, Business Insurance magazine writes about how carriers may decide to drop medical cost-containment activities to comply with new regulations requiring companies to spend no more than 15% of their premiums on “administrative costs.” Such an effect from these government-imposed price controls would RAISE, not lower, costs over time, as carriers would have a perverse incentive not to undertake disease management and other related activities that work to bring down costs by improving beneficiaries’ health.