Important Context on Next Year’s Premium Increases
The Associated Press yesterday published an article that at first appears to contain exciting and important news:
There’s good news for most companies that provide health benefits for their employees: America’s slowdown in medical costs may be turning into a trend, rather than a mere pause.
A report Tuesday from accounting and consulting giant PwC projects lower overall growth in medical costs for next year, even as the economy gains strength and millions of uninsured people receive coverage under President Barack Obama’s health care law.
As with many things in health care, however, if it looks too good to be true, it probably is. Only in the tenth paragraph does the full picture become clear:
PwC’s report forecasts that direct medical care costs will increase by 6.5 percent next year, one percentage point lower than its previous projection.
In other words, overall employer health costs in 2014 will rise by more than twice the rate of economic growth and nearly four times faster than overall inflation, based on recent Federal Reserve projections. Moreover, the PwC report notes that insurance premiums may rise even faster on insurance exchanges due to the massive uncertainty associated with Obamacare: “Insurers face the uncertainty of who will enroll—the sick, the healthy, or a combination of the two.”
The study also points out that consolidation in the health care sector has served to drive up prices: “Studies have shown that hospital mergers in concentrated markets can increase prices by more than 20%.”
The bottom line is clear: Then-Senator Obama promised that Obamacare would lower premiums by $2,500 for struggling American families. Today’s report from PwC puts President Obama even further away from living up to that promise.
This post was originally published at The Daily Signal.