Early signs of Health Care Law impact

By U.S. Chamber of Commerce

American consumers are enjoying a brief “calm before the storm” reprieve when it comes to health care costs and the implementation of President Obama’s health care law. National health care spending slowed again in 2011, according to the the study by Health Affairs based on data from the Centers for Medicare and Medicaid Services. The rate of increase in health spending, 3.9% in 2011, was the same as in 2009 and 2010. That’s compared to the more than 5% increase in spending each year from 1961 to 2007.

House Ways and Means Chairman Dave Camp dug a bit deeper into the analysis accompanying the report and found that once the health care exchanges and Medicaid expansion included in the bill begin to take effect in 2014, private health insurance premium growth will increase 108% faster than what would have occurred prior to the health care law.

But there are already signs that health care spending could escalate after the main provisions of the health care law go into effect in 2014 and more than 30 million uninsured Americans enter the system.

Young workers between the ages of 21 and 29 could see their health care premiums go up as much as 42% under the Affordable Care Act (ACA), according to a new study from management consulting firm Oliver Wyman.

That’s because of a provision that restricts the amount by which rates can vary for different aged enrollees, a phenomenon which is known as age band compression. The result of age band compression is that younger people will have to pay more for their coverage than they do now so that older people can pay less – the old “rob Peter to pay Paul” argument.

It’s going to be especially difficult for young people to pay for health insurance if companies that employ them keep cutting back on their hours. One of the biggest industries employing young workers is the restaurant industry, and owners of franchises such as Wendy’s and Taco Bell are already taking steps to mitigate their health care costs.

But even workers in their 30s can expect to pay more, according to the study. People ages 30 to 39 with single coverage who are not eligible for premium assistance would see an average premium increase of 31%. Those ages 60 to 64 would see premiums increase by about 1%.

Our core finding is that young, single adults aged 21 to 29 and with incomes beginning at about 225 of the FPL, or roughly $25,000, can expect to see higher premiums than would be the case absent of the ACA, even after accounting for the presence of the premium assistance.

Even Fido isn’t immune from increased health care costs, according to Dr. Neil Shaw, founder of Bluepearl Veterinary Partners. Shaw spoke to Fox Business about the newly implemented 2.3% device tax on dual-use devices such as CAT scan and ultrasound equipment, and items used for knee replacement and cataract surgeries:

The challenge is that almost all the equipment we use is the same equipment is the same equipment that is used on people. And our goal is to provide these services at a cost affordable basis. Unfortunately, this is going to drive the cost up…

It remains to be seen how much the suppliers of fluid pumps, of endoscopes, other pieces of equipment are going to raise our prices…I think the likelihood is [that] as the cost to produce the service goes up …it does cause the cost for the consumer to go up.


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