Obamacare Costs for Taxpayers May Increase

September 12th, 2013
in econ_news, syndication

Econintersect: Academic studies say the government cost of the Patient Protection and Affordable Care Act (PPACA, aka Obamacare) will be very sensitive to small changes in the health care coverage world. The costs falling on the government can change by billions of dollars for relatively small changes in the insurance exchange offerings and responses by employers.

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Follow up:

One study finds that small increases in employer provided plans could shift millions of people into the public insurance exchanges and shift the supplemental support for premium payments from companies to government.

Another study finds that costs of Obamacare accruing to the government could result in enormous pricing power for the consumer and hence reduce the cost of government subsidies. The study also concludes that the cost savings could be impacted by continued political resistance. Those politically active in "fighting" Obamacare may achieve the opposite of their stated objective; they may reduce the cost savings that could otherwise be achieved and thereby increase government expenditures, according to researchers from the Brookings Institute and Georgetown University.

A recent survey completed by Tower Watson (NYSE:TW) (reported by GEI News on 28 August 2013) found that few corporations were contemplating converting from company sponsored group health insurance plans to private insurance exchanges for active employees. However some were considering that move for retirees and a number of mjor corporations, including IBM and GE, are implementing such plans.

Will such changes for active employees follow? Will the further transition from private exchages with corporate contributions be converted over time to public exchanges with government subsidies replacing the employer contributions? These are questions that will bear watching over the next 2-3 years.

Will the public exchanges be better, worse or substantially the same as private exchanges? There is incomplete information on that and some seemingly conflicting factors.

Studies other than thise already mentioned have found a large number of "affordable" and "inexpensive" plans will be available through the public insurance exchanges. The Kaiser Foundation and Rand Corporation have published results summarized in a Bloomberg article by Alex Wayne. However, Kev Coleman (HealthPocket) has reported that "Many Big Brand and Lower Cost Insurers Deserting Obamacare Exchanges" and The New York Times has reported that "Choice of Health Plans to Vary Sharply From State ot State".

After the exchanges are opened next month a better study of exactly what is transpiring will be possible. And, at that juncture, companies will be in a better position to decide how best to mesh with the new insurance landscape of private exchanges, public exchanges and company group plans.

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