“Free” sounds good…until the bill comes

The Congressional Budget Office (CBO) predicted that 13m Americans would buy health insurance through the Obamacare exchanges in 2016, with 11m of them receiving subsidies to help pay premiums.  That is 40% lower than the 21m enrollees predicted last year.

Despite fewer than expected enrollees, the cost of running the exchanges will increase $18 billion.  Tax subsidies to insurers participating in the exchanges will cost taxpayers $4,308 per each of the 11 million subsidized enrollees. In 2010, the agency estimated that it would cost $2,810 to cover each of 21 million enrollees expected to sign up by 2016 – a whopping 53% increase in cost with ½ the enrollment.

The Blue Cross Blue Shield Association just published the “Health of America Report” which states that new ACA public exchange enrollees average 22% higher medical costs than traditional privately insured consumers.  The report goes on to say that new ACA enrollees have higher rates of certain diseases, receive significantly more medical care and take advantage of more inpatient admissions, outpatient visits, prescription drugs, emergency room visits.

The ACA is insuring more people and that is a good thing.  Unfortunately, costs are rising out of control because the law was focused on insurance reform rather than healthcare reform.  It was designed by the government for the government rather than the private market for the people.  It largely ignores the consumer experience and the real driver of rising premiums – a lack of transparency of healthcare cost and quality data in advance of or at the point of purchase.  In a nutshell, it’s not consumer-centric and hides the information from consumers so they can’t make informed and educated choices.

Frustrated with the ACA’s construct, Colorado has decided it’s going to consider taking it one step further by adopting single payer – and that decision comes on the heels of Colorado HealthOP failing in October forcing more than 80,000 people to find new plans.  Colorado Care Plan would guarantee coverage for everyone, do away with deductibles and allow consumers to choose doctors and specialists without designating those “in network” and “out of network,” etc.  That sounds wonderful, who wants to be bothered with making a responsible, informed choice?

The proposed plan details are vague, its size and cost unaffordable, introducing a new 10% tax on payroll and incomes to pay for the program.  If the ballot measure passes, it would start in 2019 and be set up like a start-up health co-op bigger than the one that just failed.  Huh?  Jeanne Nicholson, a former Democratic state senator said, “We don’t understand why we should compromise and say some people can have bronze coverage, some can have silver and some can have gold. Why can’t we all have platinum plus?” That sounds wonderful, who doesn’t like free platinum plus?

Some estimates suggest this program would cost $38b, a price tag bigger than that of Colorado’s entire state government.  And while a 10% tax doesn’t sound all that expensive (would place Colorado near the top of the list in state taxes), it puts the control of future healthcare costs and quality in the wrong hands.  And when costs rise, because they will, the way the government will manage that cost pressure will be to raise taxes and/or restrict the amount of healthcare each resident of Colorado can use.

Heads up taxpaying residents of Colorado!  Take a page out of Vermont’s book and check out the early returns on the ACA, do the math and accept that there is no such thing as free healthcare.  Free sounds good until the bill comes.  Instead of adopting single payer, pass legislation to make your healthcare costs and quality information transparent, invest in technology to convert that raw data into consumer-centric, actionable information and then watch the free market do what it does – lower costs and improve quality.

eba[1]This article was previously published by “Employee Benefit Advisor“, an information resource for employee benefit advisers, brokers, agents and consultants.