The painful costs of Obamacare
Workers are squeezed between higher deductibles and flattened pay
Just when it looked like Obamacare couldn’t get worse, new statistical evidence shows that it can, and has. Healthcare insurance is getting more expensive for most workers because of an increase in deductions.
Employer-provided health plans defy earlier predictions that the number of such plans would fall in the face of new Obamacare regulations. While the overall number of plans did not decrease appreciably, subscribers were hit this year with big jumps in deductions, the part of medical bills insurers won’t pay. Nearly 1 in 10 of such deductions range upward from a thousand dollars. The average worker will pay more for medical expenses than ever. The clear message is, “you’re insured, but don’t get sick.”
The increases continue a growing trend. The average deductible has more than tripled, from $303 in 2006 to $1,077 this year. This is part of the explanation of why wages have flattened. Workers have chosen medical insurance benefits instead of higher wages. These deductibles have increased more than seven times the increase in wages. Increases in medical insurance premiums have actually fallen by 1 percent over 2014, falling for the first time in a decade, though the cost of family plans are up 3 per cent.
The Affordable Care Act, the polite name for Obamacare, was intended to supply subsidies to offset increases in premiums. But apart from difficulties in getting these subsidies in place — state-administered funds versus federal funds — the growing difficulty for the average worker is an increase in deductibles (and co-pays) rather than more expensive premiums.
A Kaiser Family Foundation study reports the average deductible for a generous plan this year is $2,500 or more. Predictions that this would undermine company plans is now being borne out. This trend is further reinforced by the so-called employer mandate in Obamacare, which requires employers of a hundred or more employees to provide health benefits; this becomes 50 or more employees in 2016. Businessmen argue that this requirement costs jobs, and accounts in part for the growing structural unemployment even as the economy slowly sputters to life. Managers are reluctant to add workers and try to stay under those ceilings.
Another piece of bad news in the Kaiser study is that the Obamacare’s 13 percent tax on so-called “Cadillac” plans has led many companies to withdraw them. Opposition to the tax is coming as much from the Obama administration’s usually loyal unions as from business companies.
It’s tempting to say to the president and his incompetent fixers that we told you so. But we won’t. The slap-dash, do-it-beforeanyone-looks Obama administration’s attempt to solve the infinitely complicated shortcomings of the medical care system, comprising a sixth of the economy, with one magic pill was inevitably doomed. No one should minimize the difficulty of matching technology, expensive in its initial development, to the demands of an aging population. Critics of Obamacare who are tempted to search for another magic pill should be careful. Miracle cures are always fraught with peril.