When and How big will be the Premium increases?

[william the wie]

OK, the increased out of pocket expenses of and increased taxes to support ACA will hit in January but that will not really compound into a major problem until the second quarter.

Yeah, there may be huge increases in exchange premiums and they may be large enough to effectively kill the program but the taxes will remain. And the premium increases are unlikely to be that big.

We are overdue for a recession and a bear market but I find this meme that ACA is meltdown II on steroids a bit overdone. Yeah it could happen but the effective range of premium increases that would not kill the program but would kill the economy would take a nanometer stick to measure if it exists at all. The argument that the ACA taxes and premiums will kill the economy may be effective as a political talking point but as an effective economic forecast I kind of doubt it.

 

[Rozman]

Yup people having less money to spend because of higher premiums and high deductibles and higher
co pay will not have an effect on the economy at all...

 

[william the wie]

Yup people having less money to spend because of higher premiums and high deductibles and higher
co pay will not have an effect on the economy at all...

I'm glad you included a smilie I was wondering if I should contact the moderators to send a psychiatric ambulance by your place before I saw that.

 

[oldfart]

Under the impression that one of your motives is to get a straight answer, I'll give it a shot.

Yeah, there may be huge increases in exchange premiums and they may be large enough to effectively kill the program but the taxes will remain. And the premium increases are unlikely to be that big.

The tax is laughable. Most folks would qualify for one of the exceptions (one being that someone is too poor to pay the premium) and the tax is the lesser of $95 or 2% of income for 2014. I don't see $95 driving many people into bankruptcy.

The government under ACA is the reinsurer of last resort, so exchange premiums won't go up until 2015, and then probably not much. The highest credible estimate I have seen is that 10% of current policyholders will find premiums higher than they would be without ACA. Remember the health insurance industry has been raising premiums and cutting benefits every year. The most popular way for doing his is to discontinue the older "indemnity" plans and force people into high deductible plans with the same or higher premiums. Estimates are that without ACA, 40% of remaining indemnity plans would have been cancelled anyway. ACA just gives the health insurance industry a way to blame the government for what they were doing anyway.

We are overdue for a recession and a bear market but I find this meme that ACA is meltdown II on steroids a bit overdone. Yeah it could happen but the effective range of premium increases that would not kill the program but would kill the economy would take a nanometer stick to measure if it exists at all. The argument that the ACA taxes and premiums will kill the economy may be effective as a political talking point but as an effective economic forecast I kind of doubt it.

Agreed. To me the acid test is how quickly the level of uncompensated care goes down. This is the real nightmare for Republicans. About 40% of hospital pricing today reflects the costs of uncompensated care. One older study estimated that medical needs of the uninsured was a major driver in health care inflation via several routes, including driving people toward emergency care and delaying diagnosis and treatment until very expensive end-of-life measures were necessary. If preventative care replaced late diagnosis care and uncompensated care was replaced with even minimal reimbursement, costs could be slashed.

 

[expat_panama]

...The argument that the ACA taxes and premiums will kill the economy may be effective as a political talking point but as an effective economic forecast I kind of doubt it.

Political bias has a bad habit of clouding the view to future economic conditions, and a clearer view of the affect of taxes on market activity is always available though looking at what's going on now (from here):

Confusing reporting rules will bite the IRS
Rick Moran

If you are currently receiving a subsidy from the government for your health insurance, you better be aware that any "life changes" that occur during the year - marriage, divorce, increase in income - has to be reported to the IRS. Otherwise, you're liable to get a nasty surprise come tax time.

Politico:

It's a new responsibility for this group - many of whom are just struggling to sign up.

The IRS, for its part, must make sure consumers don't get blindsided - or it will face a bunch of angry taxpayers who didn't realize they would owe Uncle Sam money back, tax experts said.

"If I were the IRS, I would be very concerned that I'm going to be viewed as the villain when people have to pay back money the government gave them for health insurance," said Chris Condeluci, who was Senate Finance Committee GOP tax counsel during drafting of the Affordable Care Act.

There is time. Potential "repayments" to the government will not come due until 2015, when recipients file next year's taxes. But the new rule for reporting these life changes begins this January.

(WATCH: Obamacare timeline)

But there might be good news: If a recipient's income were to fall and it wasn't reported, the recipient could get a nice, fat check because he or she would be owed a larger Obamacare tax credit than was received.

Right now, the IRS does explain the issue on its website, but consumers would have to be looking for the information to find it.

All experts interviewed on the topic worried that most tax credit recipients do not have a clue about the new reporting responsibilities, noting that even policymakers are still trying to grasp how the process works.

In California alone, 38 percent of tax credit recipients are projected to have to pay back more than $850 - if no income changes are reported during the year, according to a September Health Affairs study.

Most repayments would likely mean smaller tax refunds, rather than a new tax bill. That's because those most likely to use the credits receive around $3,000 in tax refunds each year, said Ken Jacobs, a University of California Berkeley professor and co-author of that study.

Still, a smaller refund can bring hardship for this population, whose members often rely on the annual tax refund check to help pay basic bills.​

Speaking of angry taxpayers, there are still a third of Americans who are unaware of the fact that they must buy health insurance or face a penalty from the IRS. Imagine the nasty surprise these taxpayers are going to receieve when they open their refund checks and find that the tax has been taken off the top.

How much more burdensome can Obamacare get? The paperwork burden for businesses can't be calculated yet because the employer mandate won't take effect until next year. At that point, businesses must certify that their employees are covered by an Obamacare compliant health insurance plan - just one additional chore facing companies beause of the ACA.

 

[Moonglow]

My family and I are not affected at all by the ACA? I hope the best for those it does.

 

[OnePercenter]

Yup people having less money to spend because of higher premiums and high deductibles and higher
co pay will not have an effect on the economy at all...

Up 380% since Reagan fucked with the HMO act.

 

[Whereisup]

OK, the increased out of pocket expenses of and increased taxes to support ACA will hit in January but that will not really compound into a major problem until the second quarter.

Yeah, there may be huge increases in exchange premiums and they may be large enough to effectively kill the program but the taxes will remain. And the premium increases are unlikely to be that big.

We are overdue for a recession and a bear market but I find this meme that ACA is meltdown II on steroids a bit overdone. Yeah it could happen but the effective range of premium increases that would not kill the program but would kill the economy would take a nanometer stick to measure if it exists at all. The argument that the ACA taxes and premiums will kill the economy may be effective as a political talking point but as an effective economic forecast I kind of doubt it.

A few years ago there was a Congressional Budget Office estimate that by (I'm not sure I remember exactly) 2030 or so, health care would cost 25% of the Gross National Product. That would be up from about 17% of GNP today. So if it were spread evenly, costs for a family would rise just a bit less than 50%. Of course, that kind of COB projection is very approximate.

In contrast, all developed universal health care nations pay much less for health care the United States. The most expensive universal health care system costs just short of 11% of GDP, so is substantially less than our 17% and rising. GDP isn't exactly the same as GNP, but it is very close. Most developed universal health care systems cost less than 10% of GDP.

The only thing that would have held down health care costs, near the end of the compromise process, would have been the public option. However, the Republicans forced the Democrats to remove the public option from the bill.

The essential problem is that the American health care private business system isn't a free market. Therefore, within limits, the health care businesses can raise prices as much as they want. Of course, that is somewhat limited because they can't raise prices faster than the economy can absorb the increases, but that is still fairly fast. They can make a mistake and raise prices too fast for the economy to absorb, if they are greedy enough, but health care leaders are quite intelligent so perhaps they won't make that mistake.

Jim

 

[william the wie]

Concur with the last paragraph WIU but with anti-commandeering legislation relative to Ocare subsidies being proposed or enacted by 12 states and loopholes such as temporary insurance and the use of religious associations for healthcare insurance there is likely to be a great deal of migration because of the ACA. Shipping the indigents out of and the jobs into Red states appears to be the major probable unintended consequence of the program. That is going to hurt a whole bunch come the 2014 election not to mention that the ACA can be blamed for a downturn actually caused by say the Chinese real estate bubble bursting or deindustrialization of the PIGS in the EU.

The Ds can say, and I suspect correctly, that correlation is not causation until the cows come home. That will do little good in say CA where the network is so narrow and shallow that waiting line deaths to see a specialist are not a question of if, because it is already happening now, but rather how much of the expected increase can be blamed on ACA. The ACA is the perfect whipping boy for everything from antarctic icepack expanding during summer down there to the increased availability of prescription drugs on the black market. (A logical consequence of over subscription to avoid bad outcome penalties. People either stoned out of their mind or making money off of selling their prescriptions are much less likely to report a bad outcome.) And as Alabama Blue Cross/Blue Shield has shown the tax on insurance premiums can be demagogued as soaking the poor.

So, the ACA may be the best thing since sliced bread in the long run but its timing sucks enough that it may not have a long run.