ACA’s ‘rosy’ savings projections are not holding up

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I received an interesting email recently from CareConnect, the new health insurer owned by the North Shore Hospital System. Apparently, New York State required rates 5% higher than CareConnect had requested.

For the past two years, the New York regulators slashed requested rate increases, and then they were hit with a black eye in the form of the Health Republic failure. Regulators were accused of forcing inadequate rates which threatened the solvency of insurers and the security of their policyholders. The 23% small-group market rate increase will shock New Yorkers covered by CareConnect. Although press releases are showing average increases in the 10% range, real increases will be higher as the lower-cost options disappear.

Also see:8 office policies that drive workers crazy.”

Rising expenditures
The Department of Health and Human Services has released its report on the 2015 Medicaid expenditures, and the outcome was surprising. In 2015, Medicaid spending was estimated to have reached $554.3 billion for 68.9 million recipients. Costs per recipient have escalated from a little over $7,300 to slightly more than $8,000.

Notably, 2014 costs per enrollee were almost unchanged from 2013. In these two years, enrollment increased by 8.6 million from 59.7 million. By 2024, the CBO expects Medicaid expenditures to grow to $920.5 billion with 77.5 million enrolled (19 states have yet to elect Medicaid expansion proposed under ACA). The growth rate per enrollee is projected to be 6.4%. The New York Times reported that the cost of Medicaid expansion was $6,366 per person in 2015, about 49% higher than previously estimated.

The defenders of the ACA have been putting out the best information they could justify, but as real costs materialize, the rosy projections are not holding up. Americans are already grumbling about healthcare affordability. They also need to be concerned about tax increases for federal and state funding of Medicaid and exchange subsidies. The new president and Congress are going to have their hands full with this one.

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Healthcare costs Obamacare Cost transparency HHS