Thursday, May 21, 2015

Cost Consequences of Centralized Control

Centralized control of health care - ObamaCare - may have unintended consequences – premium cost increases. This may may end as the central lesson of the health law.

If you’ll recall, ACA passed on a wing and a prayer with the promise it would control costs of American health care, wh twice that of any other nation.

Instead the opposite may be the case. It costs money to comply with the raft of new regulations. To evade or minimize the cost of these regulations, hospitals and physicians are consolidaing and monopolizing many markets.

Consolidated health care organizations, as the only game in town, can negotiate and command higher prices. Federal antitrust authorities are often either too slow, too ineffective, or too powerless to counter these rising prices. Insurers raise rates to stay in business and satisfy investors, knowing that centralized government, has pledged to bail them to avoid a deal spiral in insurance markets.

Consequently, health exchange insurers in 6 states have already asked for average premium increases of 18.6%. These increases include 36% in Tennessee, 23% in Oregon, and 7.7% in Connecticut. The Congressional Business Office has estimated premiums will rise by an average of 8.5% each year for the next 3 years. if your premium were $2000 a month this year, it would be $2533 in 3 years. These increases may not directly impact those on health exchange subsidies, but it will raise premiums for those not on subsidies, and the increased costs will be passed on to American taxpayers, who will ultimately pay the price of ObamaCare’s redistribution policies.


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