By Mayor Ken Merrifield
We find ourselves halfway through the first full year of the Affordable Care Act (ACA), commonly known as Obamacare, and speculation remains about the impact it is having on Granite Staters and our pocketbooks.
One significant impact we will see in coming months is an increase in insurance premiums. As Mayor of Franklin, I have spoken to both small businesses and individuals who struggle with the cost of health insurance. They all ask why costs are rising when the ACA was supposed to make things better?
The explanation isn’t simple, but there are answers.
The ACA expands coverage, guarantees coverage for those with pre-existing medical conditions, broadens benefits, changes the way premiums are calculated, taxes health insurance, and provides financial assistance to qualifying individuals. In short, the law includes both significant new benefits and therefore – new costs.
These changes primarily impact people who purchase coverage on their own or through a small business employer. Health insurance premiums must cover the cost of providing these new benefits and ensure that there is enough funding to pay for the hospitals, doctors and medical services used by the tens of millions of people who have insurance.
Most of the law’s requirements took effect in 2014, but there are additional changes and factors that will impact premiums in 2015.
The most important thing to understand about the ACA’s impact on premiums is that it varies very widely based on a number of factors. These factors include: where people live, what coverage they previously had, their age, their income, and the health status of the pool of people purchasing ACA coverage in a particular market.
People who kept their old plans in 2014, but who will be shopping for new plans that meet the requirements of the ACA in 2015, are likely to see increased premiums. This is of particular importance. I know numerous business owners who barely held onto their old plans late in 2013 and this will be a big sticker shock to them.
A number of new taxes were enacted that raise the cost of health insurance premiums. By far the largest new tax that started in 2014 was the tax that health insurance companies pay on the coverage they provide to individuals, families, small and mid-size employers, beneficiaries in Medicare Advantage, and state Medicaid managed care programs. The tax will total more than $100 billion over the next 10 years. The bipartisan Joint Committee on Taxation in Congress estimates that the tax will add $350‐$400 a year to family premiums.
The healthcare law brings guaranteed access to healthcare regardless of pre‐existing conditions. That noble goal comes at a high cost, and now premiums reflect this.
Some individuals with particularly costly pre-existing medical conditions previously received coverage through federal or state‐sponsored “high-risk” pools. Under the ACA, these high-risk pools are being phased out, bringing significant new medical spending into the health insurance system – the costs of which are spread among the premiums of everyone who has insurance.
So all of this means individuals and business owners should prepare themselves because the premium increases are coming. It’s easy to blame insurance companies, but they are being forced to implement a complicated and costly new healthcare law. There is a reason the Affordable Care Act is referred to as “Obamacare” – because the President created it, and that is where the buck should stop.
(Ken Merrifield is the Mayor of Franklin, New Hampshire and vice chairman of the New Hampshire Republican State Committee.)
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