Skyrocketing Premiums Show Obamacare’s Failure to Deliver

According to a recently released report, extending employer-provided health coverage to the average American family equates to buying that family a moderately-priced car every single year. This provides further proof that Barack Obama “sold” a lemon to the American people in the form of Obamacare.

The inexorable rise in health care costs—a rise that candidate Obama pledged to reverse—shows how Obamacare has failed to deliver on its promise. Yet Democrats want to “solve” the problems Obamacare is making worse through even more government regulations, taxes, and spending. Struggling American families deserve relief from both the failed status quo, and Democrats’ desire to put that failed status quo on steroids.

Study of Employer Plans

Obamacare has failed to deliver on that pledge, as premiums continue to rise higher and higher:

Why has Obamacare failed to deliver? Several reasons stand out. First, its numerous regulatory requirements on insurance companies raised rates, in part by encouraging individuals to consume additional care.

The pre-existing condition provisions represent the prime driver of premium increases in the exchange market, according to a Heritage Foundation paper from last year. However, because employer-sponsored plans largely had to meet these requirements prior to Obamacare, they have less bearing on the increase in employer-sponsored premiums.

Second, Obamacare encouraged consolidation within the health care sector—hospitals buying hospitals, hospitals buying physician practices, physician practices merging, health insurers merging, and so on. While providers claim their mergers will provide better care to patients, they also represent a way for doctors and hospitals to demand higher payments from insurers. Reporting has shown how hospitals’ monopolistic practices drive up prices, raising rates for patients and employers alike.

Same Song, Different Verse

More Regulations: On issues like “surprise” billing or drug pricing, Democrats’ favored proposals would impose price controls on some or all segments of the health care industry. These price controls would likely limit the supply of care provided, while also reducing its quality.

More Spending: Most Democratic proposals, whether by presidential candidates, liberal think-tanks, or members of Congress, include major amounts of new spending to make health care “affordable” for the American people—an implicit omission that Obamacare (a.k.a. the “Affordable Care Act”) has not delivered for struggling families.

More Taxes: Even though some don’t wish to admit it, the Democratic candidates for president have all proposed plans that would necessitate major tax increases, from the hundreds of billions to the tens of trillions of dollars—even though at least two of those candidates have failed to pay new taxes imposed by Obamacare itself.

The latest increase in employer-sponsored health premiums demonstrates that hard-working families deserve better than Obamacare. It also illustrates why the American people deserve better than the new Democratic plans to impose more big government “solutions” in the wake of Obamacare’s failure.

This post was originally published at The Federalist.

Joe Biden’s Health Care Plan: SandersCare Lite

On Monday morning, former vice president Joe Biden released the health care plan for his 2020 presidential campaign. The plan comes ahead of a single-payer health plan speech by Sen. Bernie Sanders (I-VT) scheduled for Wednesday.

Biden’s plan includes several noteworthy omissions. For instance, it does not include any reference to health coverage for foreign citizens illegally present in the United States. That exclusion seems rather surprising, given both Democrats’ embrace of health benefits for those unlawfully present in last month’s debate, and Biden’s repeated references to the issue.

Biden said later on Monday that illegally present foreign citizens should have access to “public health clinics if they’re sick,” but not health insurance. He also claimed that last month’s debate format did not give him enough time to explain his position.

Overall, however, Biden’s plan includes many similarities to Sanders’. While both Sanders and Biden want to draw contrasts on health care—Sanders to attack Biden as beholden to corporate interests, and Biden to attack Sanders for wanting to demolish Obamacare—their plans contain far more similarities than differences.

Losing Coverage

Sanders’ bill would, as the American people have gradually learned this year, make private insurance “unlawful,” taking coverage away from approximately 300 million Americans. Biden’s plan specifically attacks single payer on this count, for “starting from scratch and getting rid of private insurance.”

As with Obamacare, Biden’s promise will echo hollow. By creating a government-run “public option” like Sanders’, the Biden plan would also take away health coverage for millions of Americans. As I have previously explained, a government-run plan would sabotage private insurance, using access to Treasury dollars and other in-built structural advantages.

In 2009, the Lewin Group concluded that a government-run health plan, available to all individuals and paying doctors and hospitals at Medicare rates (i.e., less than private insurance), would lead to 119.1 million individuals losing employer coverage:

More Spending

Biden would also expand the Obamacare subsidy regime, in three ways. He would:

  1. Reduce the maximum amount individuals would pay in premiums from 9.86% of income to no more than 8.5% of income, with federal subsidies making up the difference.
  2. Repeal Obamacare’s income cap on subsidies, so that families with incomes of more than four times the poverty level ($103,000 for a family of four in 2019) can qualify for subsidies.
  3. To lower deductibles and co-payments, link insurance subsidies to a richer “gold” plan, one that covers 80% of an average enrollee’s health costs in a given year, rather than the “silver” plan under current law.

All three of these recommendations come from the liberal Urban Institute’s Healthy America plan, issued last year. However, they all come with a big price tag. Consider the following excerpt from Biden’s plan:

Take a family of four with an income of $110,000 per year. If they currently get insurance on the individual marketplace [i.e., Exchange], because their premium will now be capped at 8.5% of their income, under the Biden Plan they will save an estimated $750 per month on insurance alone. That’s cutting their premiums almost in half. [Emphasis original.]

That’s also making coverage “affordable” for families through unaffordable levels of federal spending. By its own estimates, Biden’s plan will give a family with an income of $110,000 annually—which is approximately double the national median household income—$9,000 per year in federal insurance subsidies. Some families with that level of income may not even pay $9,000 annually in federal income taxes, depending upon their financial situation, yet they will receive sizable amounts of taxpayer-funded largesse.

Price Controls and Regulations

The drug price section of the Biden plan includes the usual leftist tropes about “prescription drug corporations…profiteering off of the pocketbooks of sick individuals.” It proposes typical liberal “solutions” in the form of price controls, whether importing price-controlled pharmaceuticals from overseas, or allowing “an evaluation by…independent board members” (i.e., bureaucrats) to determine prices.

Ironically, Biden’s plan implicitly acknowledges Obamacare’s flaws. In talking about prescription drug pricing, Biden omits any discussion of the “rock-solid deal” that the Obama administration cut with Big Pharma, so that pharmaceutical companies would run ads supporting Obamacare.

Likewise, Biden’s plan notes that “the concentration of market power in the hands of a few corporations is occurring throughout our health care system, and this lack of competition is driving up prices for consumers.” Yet it fails to note the cause of much of this consolidation: Obamacare encouraged hospitals to gobble up physician practices, and each other, to obtain clout in negotiations with insurers. Typically, after acknowledging government’s failures, Biden, like Sanders, prescribes yet more government as the solution.

In the leadup to debate on “repeal-and-replace” legislation several years ago, conservative Republicans said they did not want any replacement to become “Obamacare Lite.” Just as history often repeats itself, Democrats seem ready to embark on a similar intra-party debate. That’s because, no matter how much Biden wants to draw distinctions between his proposals and single payer, his plan looks suspiciously like “SandersCare Lite.”

This post was originally published at The Federalist.

Hospital Monopolies Are What’s Wrong with American Health Care

Call it a sign of the times. If Rich Uncle Pennybags (a.k.a. “Mr. Monopoly”) appeared today, he would have little interest in holding properties like the Short Line Railroad. In the 21st century, acquiring railroads, or even utilities, is so Baltic Avenue. The real money—and the real monopolies—lie in health care, specifically in hospitals.

Despite the constant focus on prescription drug prices, pharmaceuticals represent a comparatively small slice of the American health care pie. In 2016, national spending on prescription drugs totaled $328.6 billion. That’s a large sum on its own, but only 9.8 percent of total health care spending. By contrast, spending on hospital care totaled nearly $1.1 trillion, or more than three times spending on prescriptions.

Hospitals’ Monopolistic Tactics

The Journal profiled several under-the-radar tactics that some large hospitals use to deter competition and pad their bottom lines. For instance, some contracts “prevent patients from seeing a hospital’s prices by allowing a hospital operator to block the information from online shopping tools that insurers offer.”

Hospitals use these tactics to oppose transparency, because they fear, correctly, that if patients know what they will pay for a service before they receive it, they may take their business elsewhere. It’s an arrogant and high-handed attitude straight out of Marxism.

Also in hospitals’ toolkits: So-called “must-carry” clauses, which require insurers to keep their hospitals in-network, regardless of the high prices they charge, or poor quality outcomes they achieve. The Journal reported that one of the nation’s largest retailers wanted to kick out the lowest-quality providers, but had no ability to do so.

Officials at Walmart a few years ago asked the insurers that administered its coverage…if the nation’s largest private employer could remove from its health-care networks the 5% of providers with the worst quality performance. The insurers told the giant retailer their contracts with certain health-care providers didn’t allow them to filter out specific doctors or hospitals, even based solely on quality measures.

Surprise! Obamacare Made It Worse

Many of these trends preceded President Obama’s health care law, of course. But it doesn’t take a PhD in mathematics to see how hospital mergers accelerated after 2010, the year of Obamacare’s passage:

Hospitals responded to the law by buying up other hospitals, increasing market share in an attempt to gain more negotiating “clout” against health insurers. That leverage allows them to demand clauses such as those preventing price transparency, or preventing insurers from developing smaller networks that only include efficient or better-quality providers.

Here again, industry consolidation begets higher prices. In many cases, hospitals can charge more for services provided by an “outpatient facility” as opposed to one provided by a “doctor’s office.” In some circumstances, the patient will receive the same service, provided by the same doctor, in the same office, but will end up getting charged a higher price—merely because, by buying the physician practice, the hospital can reclassify the office and procedure as taking place in an “outpatient facility.”

Remember: Hospitals Endorsed Obamacare

In 2010, the American Hospital Association, along with other hospital associations, endorsed Obamacare. At the time the hospital lobbies claimed that the measure would increase the number of Americans with health insurance coverage. For some reason, they neglected to mention how the law would also encourage the consolidation that presents ever-upward pressure on insurance premiums.

But remember too that Obama repeatedly promised his health-care law would lower premiums by $2,500 for the average family. Unfortunately for Americans, however, Obamacare’s crony capitalism—allowing hospitals to grow their operations, and thus their bottom line, in exchange for political endorsements—continues to contribute to higher premiums, putting Obama’s promise further and further away from reality.

This post was originally published at The Federalist.

Do Democrats Want Obamacare to Fail under Donald Trump?

In their quest to take back the House and Senate in November’s midterm elections, Democrats have received a bit of bad news. The Hill recently noted:

Health insurers are proposing relatively modest premium bumps for next year, despite doomsday predictions from Democrats that the Trump administration’s changes to Obamacare would bring massive increases in 2019. That could make it a challenge for Democrats looking to weaponize rising premiums heading into the midterm elections.

Administration officials confirmed the premium trend last Friday, when they indicated that proposed 2019 rates for the 38 states using healthcare.gov averaged a 5.4 percent increase—a number that may come down even further after review by state insurance commissioners. So much for that “sabotage.”

The messaging strategy once again illustrates the political peril of rooting for something—particularly legislation Democrats worked so hard to enact in the first place—to fail on someone else’s watch. Like officials accused of “talking down the economy” so they can benefit politically, Democrats face the unique task of trying to talk down their own creation, while blaming someone else for all its problems.

The Obamacare Exchanges’ Prolonged Malaise

While Obamacare hasn’t failed due to President Trump, it hasn’t succeeded much, either. Enrollment continues to fall, particularly for those who do not qualify for subsidies. Two years ago—long before Donald Trump had any power to “sabotage” Obamacare as president—Bill Clinton called Obamacare “the craziest thing in the world” for these unsubsidized persons, and their collective behavior demonstrates that fact.

A recent study from the liberal Kaiser Family Foundation concluded that, away from Obamacare exchanges, where individuals cannot receive insurance subsidies, enrollment fell by nearly 40 percent in just one year, from the first quarter of 2017 to the first quarter of this year. However, the rich subsidies provided to those who qualify for them—particularly those with incomes below 250 percent of the federal poverty level, who receive reduced cost-sharing as well—strongly encourage enrollment by this population, making it unlikely that the insurance exchanges will collapse on their own.

President Trump can talk all he wants about Obamacare imploding, but so long as the federal government props tens of billions of dollars into the exchanges, it probably won’t happen.

Good Reasons for Premium Moderation

Those premium subsidies, which cushion most low-income enrollees from the effects of premium increases, coupled with a lack of competition among insurers in large areas of the country, have allowed premiums to more-or-less stabilize, albeit at levels much of the unsubsidized population finds unaffordable. Think about it: If you have a monopoly, and a sizable population of individuals either desperate for coverage (i.e., the very sick) or heavily subsidized to buy your product, it shouldn’t take a rocket scientist to break even, much less turn a profit.

As a recent Wall Street Journal article notes, insurers spent the past several years ratcheting up premiums, for a variety of reasons: A sicker pool of enrollees than they expected when the exchanges started in 2014; a recognition that some insurers’ initial strategy of underpricing products to attract market share backfired; and the end of Obamacare’s “transitional” reinsurance and risk corridor programs, which expired in 2016.

While some carriers have adjusted 2019 premiums upward to reflect the elimination of the individual mandate penalty beginning in January, some had already “baked in” lax enforcement of the mandate into their rates for 2018. Some have long called the mandate too weak and ineffective to have much effect on Americans’ decision to buy coverage.

It Could Have Been Worse?

Liberals have started to make the argument that, but for the Trump administration’s so-called “sabotage” of insurance markets, premiums would fall instead of rise in 2019. (Some insurers have proposed premium reductions regardless.) The Brookings Institution recently released a paper claiming that in a “stable policy environment” without repeal of the mandate, or the impending regulatory changes regarding short-term insurance and Association Health Plans, premiums would fall by an average of approximately 4.3 percent.

But as the saying goes, “‘It could have been worse’ isn’t a great political bumper sticker.” Democrats tried to make this point regarding the economic “stimulus” bill they passed in 2009, after the infamous chart claiming unemployment would remain below 8 percent if the “stimulus” passed didn’t quite turn out as promised:

In 2011, House Minority Leader Nancy Pelosi (D-CA) tried to make the “It could have been worse” argument, claiming that unemployment would have risen to 15 percent without the “stimulus”:

But even she acknowledged the futility of giving such a message to the millions of people still lacking jobs at that point (to say nothing of the minor detail that studies reinforcing Pelosi’s point didn’t exist).

There’s No Need for a Bailout

While the apparent moderation of premium increases complicates Democrats’ political message, it also undermines the Republicans who spent the early part of this year pressing for an Obamacare bailout. Apart from the awful policy message it would have sent by making Obamacare’s exchanges “too big to fail,” such a measure would have depressed turnout among demoralized grassroots conservatives who want Congress to repeal Obamacare.

As it happens, most state markets didn’t need a bailout. That’s a good thing on multiple levels, because a “stability” bill passed this year would have had little effect on 2019 premiums anyway.

That said, if Democrats want to make political arguments about premiums in this year’s elections, maybe they can tell the American people where they can find the $2,500 in annual premium reductions that Barack Obama repeatedly promised would come from his health care law. Given the decade that has passed since Obama first made those claims without any hint of them coming true, trying to answer for that broken promise should keep Democrats preoccupied well past November.

This post was originally published at The Federalist.

What You Need to Know about President Trump’s Health Care Executive Order

On Thursday morning, President Trump signed an Executive Order regarding health care and health insurance. Here’s what you need to know about his action.

What Actions Did the President Take?

The Executive Order did not change regulations on its own; rather, it instructed Cabinet Departments to propose changes to regulations in the near future:

  1. Within 60 days, the Department of Labor will propose regulatory changes regarding Association Health Plans (AHPs). Regulations here will look to expand the definition of groups that can qualify as an “employer” under the federal Employee Retirement Income Security Act (ERISA). AHPs have two advantages: First, all association health plans regulated by ERISA are federally pre-empted from state benefit mandates; second, self-insured plans regulated by ERISA are exempt from several benefit mandates imposed by Obamacare—such as essential benefits and actuarial value standards.
  2. Within 60 days, the Departments of Treasury, Labor, and Health and Human Services (HHS) will propose regulatory changes regarding short-term health plans. Regulations here will likely revoke rules put into place by the Obama Administration last October. Last year, the Obama Administration limited short-term plans to 90 days in duration (down from 364 days), and prevented renewals of such coverage—because it feared that such plans, which do not have to meet any of Obamacare’s benefit requirements, were drawing people away from Exchange coverage. The Trump Administration regulations will likely modify, or eliminate entirely, those restrictions, allowing people to purchase plans not compliant with the Obamacare mandates. (For more information, see my Tuesday article on this issue.)
  3. Within 120 days, the Departments of Treasury, Labor, and HHS will propose regulatory changes regarding Health Reimbursement Arrangements (HRAs), vehicles where employers can deposit pre-tax dollars for their employees to use for health expenses. A 2013 IRS Notice prevented employers from using HRA dollars to fund employees’ individual health insurance premiums—because the Obama Administration worried that doing so would encourage employers to drop coverage. However, Section 18001 of the 21st Century Cures Act, signed into law last December, allowed employers with under 50 employees to make HRA contributions that workers could use to pay for health insurance premiums on the individual market. The Executive Order may seek to expand this exemption to all employers, by rescinding the prior IRS notice.
  4. Within six months—and every two years thereafter—the Departments of Treasury, Labor, and HHS, along with the Federal Trade Commission, will submit reports on industry consolidation within the health care sector, whether and how it is raising health care costs, and actions to mitigate the same.

How Will the Order Affect the Health Sector?

In general, however, the issues discussed by the Executive Order will:

  • Give individuals more options, and more affordable options. Premiums on the individual market have more than doubled since 2013, due to Obamacare’s regulatory mandates. AHPs would allow workers to circumvent state benefit mandates through ERISA’s federal pre-emption of state laws; self-insured AHPs would also gain exemption from several federal Obamacare mandates, as outlined above. Because virtually all of Obamacare’s mandated benefits do not apply to short-term plans, these would obtain the most regulatory relief.
  • Allow more small businesses to subsidize workers’ coverage—either through Association Health Plans, or by making contributions to HRAs, and allowing employees to use those pre-tax dollars to buy the health coverage of their choosing on the individual market.

When Will the Changes Occur?

The Executive Order directed the Departments to announce regulatory changes within 60-120 days; the Departments could of course move faster than that. If the Departments decide to release interim final rules—that is, rules that take effect prior to a notice-and-comment period—or sub-regulatory guidance, the changes could take effect prior to the 2018 plan year.

However, any changes that go through the usual regulatory process—agencies issuing proposed rules, followed by a notice-and-comment period, prior to the rules taking effect—likely would not take effect until the 2019 plan year. While the Executive Order directed the agencies to “consider and evaluate public comment on any regulations proposed” pursuant to the Order, it did not specify whether the Departments must evaluate said comments before the regulations take effect.

Does the Order Represent a Regulatory Overreach?

However, with respect to Association Health Plans, some conservatives may take a more nuanced view. Conservatives generally support allowing individuals to purchase insurance across state lines, believing that such freedom would allow consumers to buy the plans that best suit their interests.

However, AHPs accomplish this goal not through Congress’ Commerce Clause power—i.e., explicitly allowing, for instance, an individual in Maryland to buy a policy regulated in Virginia—but instead through federal pre-emption—individuals in Maryland and Virginia buying policies regulated by Washington, albeit in a less onerous manner than Obamacare’s Exchange plans. As with medical liability reform, therefore, some conservatives may support a state-based approach to achieve regulatory relief for consumers, rather than an expanded role for the federal government.

Finally, if President Trump wants to overturn his predecessor’s history of executive unilateralism, he should cease funding cost-sharing reduction payments to health insurers. The Obama Administration’s unilateral funding of these payments without an appropriation from Congress brought a sharp rebuke from a federal judge, who called the action unconstitutional. If President Trump wants to end executive overreach, he should abide by the ruling, and halt the unilateral payments to insurers.

This post was originally published at The Federalist.

An Obamacare Lesson for Small Health Insurers?

In 2011, analysts were speculating that Assurant Health might exit the insurance business, the Milwaukee Journal Sentinel reported last week. So the recent news that Assurant’s parent company was looking to “sell or shut down” the insurance carrier by year’s end was not a total surprise. The issue now is whether its demise holds larger lessons about Obamacare’s impact on insurance markets.

One analyst called Assurant, which reported operating losses of nearly $64 million in fiscal 2014 and $84 million in the first quarter of fiscal 2015, a “casualty” of the law. The Affordable Care Act “required health plans to cover a package of basic benefits and required health insurers to spend at least 80 cents of every premium dollar on medical care or quality initiatives,” the Journal-Sentinel reported. Simply put, the law made health insurance more like a regulated utility—with plan designs, benefits, and overhead costs strictly regulated.

Obamacare supporters generally argue that these regulatory changes eliminate the potential for customer confusion or the sale of “substandard” insurance products. But further Journal-Sentinel reporting underscores a complication of that approach:

Finding a buyer for Assurant Health could be difficult. Unlike companies such as UnitedHealthcare or Anthem, which focus on larger employers, Assurant Health does not have the size in any one market to negotiate contracts directly with hospitals and doctors. It instead typically pays a monthly fee to other insurers to access their networks, potentially increasing its costs.

By standardizing insurance offerings—reducing or eliminating carriers’ ability to create niche markets through innovative product designs—Obamacare heightened the focus on insurers’ provider networks. Those companies that have the market clout to demand lower reimbursements from doctors and hospitals can moderate premium increases—winning more market share in the process. But smaller insurers that don’t have that clout may find themselves squeezed—and other carriers could face a similar fate to Assurant Health.

Obamacare standardizes offerings in the name of increasing competition, but doing so could end up reducing competition by creating an environment in which large insurers compete with large hospital and doctor networks in a battle of health-care oligopolies. Supporters of the law have worried about this for years—and Assurant’s impending closure appears to give more reason to do so.

This post was originally published at the Wall Street Journal Think Tank blog.

Important Context on Next Year’s Premium Increases

The Associated Press yesterday published an article that at first appears to contain exciting and important news:

There’s good news for most companies that provide health benefits for their employees: America’s slowdown in medical costs may be turning into a trend, rather than a mere pause.

A report Tuesday from accounting and consulting giant PwC projects lower overall growth in medical costs for next year, even as the economy gains strength and millions of uninsured people receive coverage under President Barack Obama’s health care law.

As with many things in health care, however, if it looks too good to be true, it probably is. Only in the tenth paragraph does the full picture become clear:

PwC’s report forecasts that direct medical care costs will increase by 6.5 percent next year, one percentage point lower than its previous projection.

In other words, overall employer health costs in 2014 will rise by more than twice the rate of economic growth and nearly four times faster than overall inflation, based on recent Federal Reserve projections. Moreover, the PwC report notes that insurance premiums may rise even faster on insurance exchanges due to the massive uncertainty associated with Obamacare: “Insurers face the uncertainty of who will enroll—the sick, the healthy, or a combination of the two.”

The study also points out that consolidation in the health care sector has served to drive up prices: “Studies have shown that hospital mergers in concentrated markets can increase prices by more than 20%.”

The bottom line is clear: Then-Senator Obama promised that Obamacare would lower premiums by $2,500 for struggling American families. Today’s report from PwC puts President Obama even further away from living up to that promise.

This post was originally published at The Daily Signal.

How Obamacare — And Big Hospitals — Will Raise Health Costs

The New York Times published a column highlighting one way Obamacare will raise health costs: by promoting hospital industry consolidation that will force prices higher.

The Times highlighted the case of two Chicago-area hospital systems whose merger was investigated by the Federal Trade Commission in 2000. The article notes that one hospital CEO “had told his board that the deal would ‘increase our leverage, limited as it might be,’ the investigation found, and ‘help our negotiating posture’ with managed care organizations.”

The other hospital’s CEO said that “it would be real tough for any of the Fortune 40 companies in this area…to walk from [the merged hospital group] and 1,700 of their doctors.” The end result of the merger:

It was a great deal for the hospitals. The fees they charged to insurers soared. One insurer, UniCare, said it had to accept a jump of 7 to 30 percent for its health maintenance organizations and 80 percent for its preferred provider organizations.

Aetna said it swallowed price increases of 45 to 47 percent over a three-year period. “There probably would have been a walkaway point with the two independently,” testified Robert Mendonsa, an Aetna general manager for sales and network contracting. “But with the two together, that was a different conversation.”

And who was left holding the bag? Not the shareholders of UniCare or Aetna. It was the people who bought their policies, who either paid higher premiums directly or whose wages grew more slowly to compensate for the rising cost of their company health plans.

Industry mergers give hospitals more market clout to raise prices—and those higher, “take it or leave it” prices are passed on to all Americans in the form of higher insurance premiums.

What has Obamacare done to solve this problem? It’s made it worse. The Times quotes Martin Gaynor, an expert on industry consolidation, about this “potentially troubling” aspect of the law:

Professor Gaynor, for instance, worries that accountable care organizations may prove anticompetitive. Merger activity has jumped in anticipation of the law’s coming fully into effect.

“Hospitals want to maintain their revenue streams and enhance their bargaining leverage,” said Professor Gaynor. “This [i.e., Obamacare] is a way to do so.”

Obamacare as a way for hospitals to “enhance their bargaining leverage”? No wonder they endorsed the law. However, the American people will be paying the price—quite literally—for years to come.

This post was originally published at The Daily Signal.

Obamacare’s Cartels Raising Health Care Costs

Two articles in the past week have demonstrated the impact of Obamacare on health care professions, and the bottom line for millions of struggling American families.  First, the Washington Post profiled two recent mergers – one among insurers, another among assisted living facilities – noting that “the health care industry is increasingly turning to consolidation as a way to cope with smaller profit margins and higher compliance costs that many anticipate when the federal government’s health care reforms under [Obamacare] take effect.”  One analyst noted that “the regulatory limitations on their margins mean that to drive profitability, they need to get leverage on [administrative costs]….In order to do that, they need to be bigger.”

The another article, this one in the Wall Street Journal, highlighted how bigger does NOT mean better for patients.  The article began with the story of a Nevada patient whose echocardiogram bill rose from $373 to a whopping $1,605 in the space of six months.  The same procedure – performed in the same office, by the same cardiologist – quadrupled in price simply because the cardiologist’s practice had been bought out by a hospital system, which used the change in ownership to extract higher prices from insurers.  The Journal notes the increasingly common nature of the practice:

With private insurers, hospital systems with strong market heft can often negotiate higher rates for physician services than independent doctors get. The differential varies widely, anywhere from 5% or less to between 30% and 40%, industry officials say.  The bounce can be far greater: Blue Shield of California said that after one group of physicians based in Burlingame, Calif., came under the umbrella of the powerful Sutter Health system in 2010, its rates for services increased about 140%.  The insurer said it saw a jump of approximately 95% after a Santa Monica, Calif., group became part of the UCLA Health System in January 2011.

Summing up then: Thanks to Obamacare, hospitals, insurers, and physicians feel the need team up – in an attempt to gang up on patients and charge the highest possible prices, raising costs rather than lowering them.  Call this many things, but do NOT call it “reform.”

Obamacare Raising Premiums in Myriad Ways

This morning, the New York Times reported on a plan by NYU Medical Center to merge with Continuum Health Partners, which runs Beth Israel and several other hospitals in Manhattan.  Perhaps unsurprisingly, the article makes clear that Obamacare is the cause of the merger, and higher premiums are likely to be the effect:

It would create one of the largest health care systems in the city, one that would have immense market power under the new federal health care system, and put pressure on independent medical practices, insurance companies and even rival medical schools, which may have to find other places to train their students….By strengthening its competitive advantage, a merged hospital system could limit options for patients and charge more for services, advocates fear.  It would also have more power to negotiate higher rates with insurance companies, which might be passed on to consumers in the form of higher premiums.

As we’ve previously noted, the law has prompted numerous hospitals and medical providers to combine, in the hopes that consolidation will allow them to charge insurance companies more for medical services.  By both encouraging provider consolidation and discouraging consumer-oriented incentives, Obamacare creates the perfect ingredients for insurance premiums to rise still higher.  And not even the New York Times can deny that fact.