The Congressional Budget Office has issued an updated accounting report on the Affordable Care Act, and there is good news. We already know some of the good news — more people will be covered by Obamacare than expected. But I just want to remind people how significant that is — the whole point of health care reform was to get more people access to proper health care.
But there is more good news. The cost of Obamacare was also revised down, saving the government a projected $104 billion. The reason for this savings is because insurance premiums are lower than expected. Hah! When was the last time you heard that health insurance cost less than expected? That means that the deficit will be lower. And even if you aren’t getting one of those government subsidies for your health insurance, you will also save money because your (unsubsidized) premiums will be lower.
According to the Kaiser Family Foundation, which has been monitoring the results of the implementation of Obamacare:
It is good news that premiums have come in lower than expected, meaning lower costs for the federal government and for families as well. It’s a sign that the ACA may be working to hold premiums down by forcing insurers to compete over price rather than by cherry-picking healthy people.
I think this is very significant. Because of the ACA (the oft maligned government regulation) health insurance is starting to act like a free market, causing insurance companies to compete.
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It’s not just competition that has caused insurance premiums to behave so strangely. It’s the cap on non-claims expenditures, too — and that part started to have an effect as soon as the law was passed four years ago.
I’ve been covered by the same insurance plan — a basic model offered to a very large & stable group as one of many options — for decades. Until 2010, a good year was one where my premiums only rose by a single-digit percentage.
In 2011, my premiums actually went down by a buck or two a month — which threw me into a panic. It was so contrary to the reality I knew, I assumed I’d been shifted to some even cheesier form of coverage.
But in fact, my plan was the same. But now my insurer was prohibited by law from spending more than 20% of its revenues on overhead — non-claim — expenses. It was a world turned upside down for them — raising their revenues suddenly meant they had to pay more claims, not add a new branch to their claims-denial operation, or increase bonuses at the top. I figured that suddenly, the annual raising of rates was no fun, if they had to give 80&% of the increase back to the customers.
*grinning* And do you know, in the years since 2011, my premiums have crept up a tiny bit — so now they are almost as high as they were in 2010! Competition among the “menu items” offered to my group hasn’t changed — but the playing field certainly has.