The Unaffordable Care Act

If prices that we pay into our government dominated health care sector are expected to jump, it is best that we are alerted to the problem as the election cycle nears a crest. That’s when politicians are slightly more attentive to public outrage. In 2016, hopes for affording health care were bleak.

Medicare Part B (doctor’s and lab services) plans no increase for 94% of beneficiaries because Social Security plans no cost of living increase for 2016. For singles earning less than $85,000 (marrieds less than $170,000), the monthly Medicare Part B premium will remain at $104.90. For the 6% of Medicare beneficiaries who earn more than $85,000 ($170,000 married) the premiums escalate with income, e.g. for singles earning over $214,000, the monthly premium will be $509.80, a 52% jump from 2015.

Eighty percent of those enrolled in the top 10 Medicare “Part D” (drug plans) will see an average 8% increase in premiums for 2016, pushing the monthly premium above $40. That hike follows a 11% hike during 2014.

The Affordable Care Act (ACA) premiums will increase by different amounts in different areas.   For individuals shopping on ACA exchanges, a new study “shows an average 13% increase in the cheapest plans (Silver and Bronze) for 2016 subsidized mandatory coverage.

Some employers provide health care coverage in plans purchased from insurance companies. Employee healthcare costs have risen steadily since the advent of ACA. In 2015, the average annual premium for single coverage is $6,251 with an average 6% increase for 2016. The 2015 average family premium is $17,545 (workers pay an average of $4,955) with an average increase of 8% for 2016 expected.

Early in the ACA rollout, co-ops had been touted as a community-centric alternative to the impersonal, profit hungry insurance companies, but co-ops have been a spectacular failure.  “Twelve of the 23 co-ops funded by HHS to replace the “public option” and supposedly provide low-cost choice for consumers have failed this year.”  Even some large insurers are finding coverage to be expensive.  Humana plans for Individual commercial health insurance prices to increase in 2016 and it plans to discontinue some plans due to higher morbidity and over utilization of emergency rooms.  Humana reported that its nearly 1 million individual commercial health insurance members dropped by 150,000 members due to termination by the Center for Medicare and Medicaid Services for lack of proper immigration documentation and/or income status.

Pharmaceutical price increases have been newsworthy throughout the year.  Now, the US Senate Special Committee on Aging is probing pharmaceuticals whose research and development appears to play no role in shocking price increases.  Valeant Pharmaceuticals, Turing Pharmaceuticals, Retrophin Inc. and Rodelis face Senate demands for information that might justify their decision to suddenly increase the prices of drugs that have been available for decades. “Turing Pharmaceutical’s Daraprim (cures toxoplasmosis) rose from $13.50 per pill to $750 per pill.  Daraprim has been available since 1953.

Some recent products of research and development have also proven to be pricing culprits.  New cancer drugs now routinely cost more than $100,000 a year.  Gilead has launched two new drugs (Sovaldi and Harvoni) that can cure Hepatitis C, but at a cost of $84,000 or more.  The effectiveness is wonderful, but the price is frightful.

The health care landscape for 2016 shows higher prices everywhere.  Medicare Part B discriminates by income, staying level for most but dumping a 52% increase of those earning above $85,000 ($170,000 married). Medicare Part D beneficiaries can expect an 8% premium increase.  The same increase may apply to those seeking non-Medicare drug insurance.  Individuals shopping in ACA exchanges can expect a 13% price increase for the cheapest plans.  Those getting health care coverage through their employer can expect a 6% to 8% cost in their share of the premium.  These averages hide the cost pain for those who are ill and have large out of pocket deductibles.

Health care is increasing at 6%, 8% and 13% for major components.  Those are three to nine times higher than the inflation in our economy and these growth rates are far higher than wage and salary increases over the past 5 years.  No one believes the drivel about ACA reining in costs.  The winning platform has to be “health care cost containment.”  Voters can’t afford anything else.

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