New Study Shows Higher Health Care Costs under Obamacare

Margot Crouch / May 26, 2011

Despite President Obama’s assurances that his massive overhaul of the health care system would control health care costs and allow Americans to keep their current coverage, the outlook indicates otherwise. PricewaterhouseCoopers (PWC) recently released its annual report on medical cost trends for 2012, and it is revealing.

The report shows health care costs and premiums continuing to rise—and uncertainty increasing for employers who offer insurance to their workers. Health care spending increased by 7.5 percent in 2010 and will grow by 8 percent this year. In 2012, it will rise again by 8.5 percent. This is exactly the opposite of the President’s promise that his health care plan would reduce premiums by $2,500 per person.

Even steeper rises in the cost of private insurance are possible, due to Obamacare’s reductions in Medicare payment rates and its expansion of the Medicaid program. PWC writes, “Hospitals and health plan executives agree that when Medicare and Medicaid pay less than costs, private payers must make up the difference.” The new law will cut provider payment rates across the board, which Medicare’s Chief Actuary warns could cause 15 percent of hospitals, skilled nursing facilities, and home health agencies to become unprofitable by 2019. As more Americans enroll in Medicaid in place of other forms of coverage, providers will face lower reimbursement for a greater number of patients. According to the report, the impact of these changes will likely mean greater cost-shifting to privately insured patients—indirectly increasing premiums. (more…)