The cost of private health insurance in America continues to rise at an alarming rate. From CNN Money:
American families who are insured through their jobs average health care costs of $19,393 this year, up 7.3%, or $1,319 from last year, according to independent actuarial and health care consulting firm Milliman Inc.
The rate increases have continued unabated despite the fact that for decades employers have been using different techniques to make employees pay an increasingly greater share of the cost of their health care.
Of the $1,319 annual increase, workers’ out-of-pocket costs this year rose 9.2%. That was more than the 6.6% increase the prior year.
Of the $19,393 overall annual cost, employees’ share is inching closer to 50%, said Lorraine Mayne, principal and consulting actuary with Milliman.
This is just more data showing that the excise tax, which was hailed by the Obama administration as a key “cost control” in the Affordable Care Act, will be a total failure. The idea of the excise tax is to cap the tax-exempt status of employer-provided health insurance, forcing employees into plans with higher co-pays and deductibles and to pay more of their premiums
The entire basis of the claim that the excise tax will work at “bending the cost curve” is founded on two clearly faulty premises:
- The first is that employers think of an employee’s insurance as the “employee’s money,” so the employer doesn’t shop around for the best deal. I’ve had top managers of small businesses, who spend a lot of time worrying about insurance costs, literally laugh in my face when I tell them that some economists actually believe this.
- The second is that by forcing people to have “skin in the game”–by paying more for their health care out of their own pocket–they will use less health care. The premise is that people are rushing out to get triple heart bypasses they don’t actually need because, to them, insurance makes the unneeded surgery seem almost free.
The excise tax, by only accelerating this cost-shifting trend that, for the past several years, has so far failed to control cost, won’t bend the cost curve.
To anyone who looks at the huge amount of available domestic and international data, instead of just the economic magical thinking championed by the Obama administration, it would be clear the issue isn’t “skin in the game.” The issue is that health care providers have an imbalance of information and often the power of monopolies or actual government-created monopolies. Since our government, unlike every other first world country, refuses to regulate the prices charged by these monopolies for their often essential products, the health care industry can and do get away with huge fees.
The result is that the Obama health care law, thanks to the excise tax, will eventually make millions of Americans’ health insurance worse for basically no good reason.