Healthcare Costs for Families- A Looming Financial Disaster

The Affordable Care Act was passed with the intent of insuring 700,000 uninsured and functionally cost-prohibitively uninsurable patients because of pre-existing conditions. By the end of 2012, 78,000 were insured. The AP reported last week over 100,000 were insured via the program at the end of February, a highly unlikely number. In any case, a majority of targeted patients remain uninsured, perhaps more.

         

The ACA allocated $5 billion for the program to cover uninsurable patients and about half of that has already been spent, so the program is being canceled as of this week. Of those patients for whom insurance was purchased prior to 2011, the average expenditure on their healthcare was $4.6 million per patient by the end of 2011. The net cost to the population of insured patients is in the $300-$400 billion range. That cost paid by the insurance companies for healthcare services will be distributed to future purchasers of healthcare insurance. The one-time cost to the government to purchase the insurance was $2.5 billion. The bulk of the money represents a cost shift to the private sector, not yet factored in to the next round of rates, which have already increased in cost.

            As a consequence, the IRS, responsible for enforcement of the health reform act has informed the Congressional Budget Office (CBO) that the average family in the US will today will owe $20,000 annually for healthcare insurance. That is for the lowest coverage available that is authorized by government, the Bronze plan.

Gold and Platinum plans may be available, but they may be unaffordable unless you are among the wealthier "1%" of Americans.

 

What are we to make of this?

 

            Firstly, less than 14% of the people intended to benefit from this healthcare reform plan have actually benefited.

            Secondly, over one third of the total money , one trillion dollars allocated by the health reform act for the decade of coverage has already been spent on that small number of patients.          Thirdly, the cost burden transferred to the insurance industry and passed on to the insured population will make private health insurance cease to exist.

 

While the extinction of the health insurance industry which is based upon demographic cost sharing and risk assessment is the goal for so-called "progressives", the government will end up as the sole third party payor for healthcare services.

            Given the inherent inefficiencies of government and the lack of competition, it is highly likely the abject failure of the initial implementation efforts of the Federal healthcare reform legislation will accelerate in the absence of competition. This is a fool’s game which will result in the centralization of decision-making and loss of freedom for individuals, communities, and States.

 

Chris Casscells, M.D.

Director, Center for Healthcare Policy

 Caesar Rodney Institute