ACA and Insurance Cost — no surprise

Lightning Bolt

According to Louise Radnofsky of the Wall Street Journal 7/1/13 “Insurance Costs Set for a Jolt“.  Should this really come as a surprise?

No surprise indeed, because very little has been done to reduce health care costs.  The ACA has 2 important financial provisions:

  1. Everyone must purchase insurance
  2. Insurance companies can’t cherry pick healthy people and dump the rest on public institutions.

The rise in total cost of US health care will continue but those who pay for it will change.  The bizarre system the US now has which forces hospitals to care for the uninsured by cost-shifting to private insurance will stop.  The cessation of cost-shifting will make costs more transparent but not smaller.

The problem is in the transition from one method of finance to another.  As the transition proceeds hospitals get a windfall profit, insurance companies raise rates due to uncertainty but score a profit with so many new policies,  premiums rise for many, and taxes go up for some.  Eventually, the system finds a new equilibrium.

Sadly,  Congress has been paralyzed by partisan issues so no improvements to the ACA have been made and no actions taken to make health care more efficient.  Other countries with health systems seem to steer the ship of healthcare but the US can’t seem to disengage the autopilot.

It seems likely that each State and even some large cities will need to act without help from the federal government.   We need ACOs to reduce cost and States could help that system grow.

That’s my view, what’s yours?

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  1. #1 by digger666 on July 2, 2013 - 11:37 PM

    Reblogged this on digger666.

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