The phrasing may be indelicate, but health care in the United States is screwed.
Premiums are on the rise, more Americans are working under high deductible plans, and the health insurance market is narrowing. It’s a bad time to be sick.
The Patient Protection and Affordable Care Act -- Obamacare -- changed everything. With the passage of the PPACA in 2010, health care was supposed to transform into a well-oiled machine that was cheaper, more efficient, and serving everyone. Unfortunately, costs are increasing, options are decreasing, and not everyone who should be signing up for health insurance is choosing to do so.
The List of Options Is Shrinking
Six years into Obamacare, the most notable development is that the major players in health insurance are dropping out of exchanges. Three of the ‘Big Five’ -- Aetna, Humana, and United Healthcare -- have announced that they’re pulling back their involvement in exchanges. Why? Frankly, they’re losing money.
Obamacare has missed its targets when it comes to enrolling a broad spectrum of Americans. Proponents hoped that a mix of incentives and penalties would encourage the youngest eligible citizens to enroll because they’re cheaper. They pay into the system, but because they’re younger and healthier, they use fewer (and less expensive) services. In short, they subsidize the older insured.
Without enough young signups, the risk pool essentially gets older and sicker -- which, for health care providers, means that services are more expensive. Reports state that some providers are losing over $1,000 per year per enrollee.
As health care providers pull out of exchanges, hundreds of counties in the United States are left with only one option -- and some, like Pinal County in Arizona, have no options at all.
… And It’s Getting More Expensive
The overall cost of healthcare is rising -- in August of this year, healthcare costs climbed by 1%. One month, one percent? That’s unsustainable.
In that same month, hospital services rose by 1.7%, and the price of prescription medication rose by 1.3%.
According to the New Yorker, family premiums have increased by 20% over the last five years. That’s a significant amount, but it’s actually less than prior increases of 31% in the five years before and 63% before that. Between health insurance and higher education, the average family is being priced out of the American Dream.
The rising costs are forcing many insured into high-deductible plans. Increased premiums are one thing; pairing that with a high deductible makes the overall cost of health care -- the actual effect on your bank account -- skyrocket.
Managing an Expensive Program is Expensive, Too
A host of new rules and regulations and an uncertain future makes for an expensive project -- and that’s a tremendous burden for American health care in 2016. A study by Health Affairs suggests that overhead costs will tack on $270 million to the execution of the ACA, with administrative costs tallying a shocking 45% of ACA-related costs this year. According to their data, 22.5% of new spending will be routed into administrative expenses. The ACA’s 80/20 rule states that providers have to spend at least 80% on actions that improve the quality of health care -- but an estimated $1,375 is spent per person on administrative costs.
The ACA has relaxed a bit in 2016 as it adjusts to the realities of the marketplace, and President Obama even sent a letter to CEOs of all participating insurers asking them for both feedback and help in developing modes of healthcare that are both cost effective and serve patients optimally. Even so, the aims of the ACA are being balanced by the marketplace as both the government and insurers figure out how to administer plans effectively while balancing the books.
The Future of Healthcare is Anyone’s Guess
The future of healthcare in the United States is uncertain, but right now, we know that businesses are wary. A report by the Federal Reserve Bank of New York shows that 20.9% of manufacturers in the state of New York are employing fewer workers as a result of the expenses and confusion related to the Affordable Care Act.
That climate of uncertainty -- we don’t know what we’re getting, how we’ll be getting it, or how good it is -- is forcing businesses large and small to proceed with caution. Employer-issued healthcare benefits have long been a tenet of the American economy, with employers touting outstanding coverage as part of compensation and employees finding security in the offerings. But the reality in 2016 is that six years into Obamacare, we don’t know whether we’ve improved or regressed.