Health care costs, the day of reckoning…someday. What does PPACA really cost?

A lot has been written about the health care reform legislation passed last March, but I am beginning to wonder if it will ever be enough, or if we will ever understand what it all means.  The legislation, actually two pieces of legislation, contains over 500,000 words and is not fully understood by many people, perhaps not even one person.

 Implementation goes on for eight years and there will be thousands of pages of regulations year after year. Although there are many estimates, nobody truly knows what it will cost the federal government, state governments or individuals in terms of new taxes higher premiums and out-of-pocket costs. One of the reasons for cost confusion is the manipulation that occurred and will continue to occur over the years.  For example, the cost of putting PPACA into effect and running it is not included in the cost for the legislation.  That additional cost is estimated to be $105 billion over the next ten years.  The legislation sets up ninety-nine new government boards, commissions and agencies and authorizes the creation of more.  The basic cost estimate for PPACA is $950 billion over ten years, but the initial ten-year period is heavily skewed to the last six years and thus the cost over the next ten years will be substantially more.

The $950 billion includes an assumption that payments to physicians under Medicare will be reduced by 21%. The Congressional Budget Office made the assumption because such a cut is in the legislation. However, these cuts were previously scheduled to go into effect, but it never happens. Recently, Congress delayed the cuts one more time.  During the health care debate, a separate piece of legislation was introduced to repeal the 21% cut in payments even while the cuts remained in PPACA.  Nobody expects the Medicare cuts to happen and if they do not, that is an additional cost to health care reform of $330 billion over the next ten years, an amount that should be added to the $950 billion. Michael D. Tanner, senior fellow at the Cato Institute estimates that if you add the $105 billion and $330 billion to the $950 billion and project those costs over a full ten-year period, the cost of PPACA is not $950 billion, but $2.7 trillion.

However, it does not stop there because after all this there is estimated to be 23 million uninsured Americans at the end of the decade.  In addition, a large part of government costs are for the subsidies provided to many Americans enrolled through the insurance exchanges.  If health care costs are not controlled and if employers find it more beneficial to shift workers into the exchanges (both probable events), the government’s costs will be higher than estimated in 2010. In addition, PPACA expands Medicaid significantly and provides only partial funding to the states to pay for this expansion thereby shifting more cost to already overburdened states and their citizens.

Finally, there is the additional cost to individuals who have health insurance. When asked during the debate about the estimates that premiums will be higher because of this law, President Obama responded that while that may be true, the insured would get more for their money.  That is the essence of the problem and a key point of contention. The government dictates what health insurance and the level of coverage Americans should have while costs become secondary.

Our children can be covered to age 26, there can be no pre-existing condition exclusions, no limits on overall benefits, 100% coverage for many services, a prescribed essential benefits package, subsidized coverage for many and much more…but we have not made health care affordable and that will continue to be the major problem for decades to come.

Related Articles

• PPACA Premium Subsidies: The Government Is Here to Help You! (thehealthcareblog.com)
• bswift Special Report Reveals Financial Impact of Key Health Reform Provisions on Mid-Sized & Large Employers (eon.businesswire.com)
• Health Care Reform: How Companies Need To Worry (forbes.com)