Sunday, May 19, 2013

ACA "Unravels"

Read more:
Follow us: @RCP_Articles on Twitter

"The gravity of this financial hit remains, for there is no place for anyone, young or old, to hide themselves from a tide of red ink. The President misleadingly has said that right now the 85 percent of Americans who have private coverage do not have to trouble themselves with doing a thing, because their protections are already built into the ACA "with a wide array of new benefits, tough new consumer protections, stronger cost control measures than existed before the law passed."

"But this glittering array of benefits does not come cheap. The current statutory definition of essential minimum benefits is so lavish that no one knows whether that coverage can be afforded at reasonable rates through the private sector. Right now, our collective generosity will mean that the cost of individual coverages in the United States on the exchanges could move up by about 32 percent, in light of the new coverage requirements based on best actuarial estimates.

"Unfortunately, what the President neglected to mention is that there is no assurance that employers will decide to keep that coverage once the costs are brought home. It turns out that the penalties for employers will be in the range of $2,000 to $3,000 to dump their coverage, which is far less than the $16,000 or so that it costs them to maintain the existing coverage. It takes little imagination, therefore, for employers to announce to their employees that they will divide the gains from dropping their current coverage through a salary increase of say $7,000, which makes it likely that the public exchanges will be inundated with new applications for coverages even at the higher rates now predicted for the bloated ACA coverage. That cost could be in the hundreds of billions if even 10 percent of the roughly 157 million individuals now covered through employee plans find that their coverage has been terminated. Ordinary people are hurt both ways."

No comments:

Post a Comment