Friday, May 16, 2014

Is this part of the promised lower costs?

The Boston Globe's Robert Weisman summarizes the effect of the tax on insurers imposed by the Accountable Care Act.  Excerpts:

Insurance companies, like drug and medical device makers, were required to help fund the Affordable Care Act through annual taxes that must be booked in the first quarter for accounting purposes. But the insurers said they will try to recoup much of the added cost through the year by boosting premiums for employers and individuals buying insurance.

The taxes and fees tied to implementation of the Affordable Care Act were assessed for the first time in the most recent quarter. They will increase in each of the next four years before leveling off in 2018. Nationally, the cost to insurers has been estimated at $8 billion this year.

Access, lower cost, and choice.  Right.  I used to think it was two out of three.  Now, it appears to be only one out of the three.

We're gradually getting to understand how the Congressional Budget Office was just able to "score" the Accountable Care Act as positive for the federal budget: "That legislation includes many other provisions that, on net, will reduce budget deficits . . . over the next 10 years and in the subsequent decade." (Original version here in 2010 also did so.)


David Harlow said...

Let's say there are eventually 15 million new commercial health insurance subscribers as a result of the ACA. (CBO said it would be 32 million.) That $8B figure translates to about $500/head/yr. Not too terrible, assuming a year's health insurance premium is around $10K on average (individual is lower, family is higher). Payors' support for the ACA was all about growing the number of covered lives, wasn't it? Seems to me that a bigger issue for payors, in the long run, is the medical loss ratio limit, which caps payor margin (or profit). That little change (at least in part) has led to Aetna rebranding itself as a health information company ....

Paul Levy said...

Thanks, David. So a 5% sales tax, eh?

Aetna understands that insurance is a commodity, and margins will be forced to shrink. Whether they can transform into a value-added service company is the big question. They have excellent leadership, so they have as good a chance as anybody.

dennis byron said...

I find both your and your first commenter's statements telling indicators of the liberal approach to public policy (progressive if you prefer). Cribbing from Jack Nicholson, there's a "You great unwashed out there can't handle the truth."

I think the first commenter, in saying "That $8B figure translates to about $500/head/yr. Not too terrible, assuming a year's health insurance premium is around $10K on average (individual is lower, family is higher)" means everyone else should accept a 5% hidden sales tax on their healthcare insurance in order to give free or almost free healthcare insurance to a relatively small group. This 5% sales tax is hidden in two senses of the word: it is not transparent as levied, and it certainly was not discussed in the run-up to the 2010 vote on the Patient Protection and Affordable Care Act.

You indicate this second meaning of the term in your saying "Access, lower cost, and choice. Right. I used to think it was two out of three. Now, it appears to be only one out of the three." In that statement you are apparently saying this two-way-hidden tax even surprises you, a very knowledgeable follower of healthcare insurance issues. But -- then you seem to say -- "that's OK."

Probably not coincidentally that $500 a year is about what Medicare beneficiaries "lose" through PPACA in lower benefits and higher out of pocket costs.

So how do you think the PPACA vote would have gone if, instead of claiming that everyone would save $2500 (a year or per family or however David Cutler has revised it), the President had said "It's only going to cost the rest of you $500 a year?"

(We on Medicare get hit twice because -- in addition to the cus in benefits and resulting higher OOP -- the hidden sales tax applies to our public Part C supplement premiums and -- I think -- our private individually purchased or employer-retiree supplement premiums.)

Paul Levy said...

I don't know how you come to any conclusion about my politics, whether liberal or not. I raised the issue of President Obama's inconsistencies on the ACA from the very beginning.

I do, however, believe that people in America should have access to health insurance.

Bob said...

I am not sure which one of the three promised benefits is being referred to as being accomplished through the implementation of the ACA. In my world none are being fulfilled. I see more people electing not to buy health insurance than in the past. I see more difficulty in patients getting access to care, or electing not to seek care and clearly choice is being severely restricted. Many more people are paying more for insurance than are paying less. Net, net, net...I suspect all three goals have not been met.