Five Reasons Americans Can't Afford the Affordable Care Act
1. The Affordable Care Act (ACA) has failed to reduce premium costs. [For updated information on premium increases click here.]
Despite the President’s claims that his health care reform would decrease the cost of health insurance,[i] premiums have skyrocketed since the implementation of the ACA due to the law’s new mandates and taxes. In Indiana, premiums will have increased an estimated 71.5% from 2013 to 2017, based on initial 2017 rate filings by insurers. Florida would see a 48.9% increase,[ii] Virginia an increase of 43.2%, and Oregon a hike of 53.0% that includes a 27.5% requested rate increase from 2016 to 2017 alone.[iii]
2. The ACA makes it less worthwhile to work and move up the ladder of opportunity.
The Congressional Budget Office (CBO) determined that as individuals’ income rises, the ACA triggers higher taxes and lower insurance subsidies, discouraging Americans from working and earning more. In fact, CBO predicts that by 2025, the ACA will cause employment to drop by the equivalent of 2 million full-time workers. Those who are concerned about income inequality and mobility should note that the leap in marginal tax rates is especially large for those attempting to move out of poverty and into the middle class.[iv]
3. The ACA places more burdens on younger Americans
The ACA disproportionately hurts young Americans by forcing them to subsidize older Americans. By imposing strict limits on the permissible cost variation by age, the law artificially shifts costs to the young.[v] To prevent young people and others from opting out of this rigged system, Obamacare threatens penalty taxes for those who are uninsured. In 2016, the fines start at $695 and can range up to $2,085 or 2.5% of household income, whichever is higher.[vi] When the ACA’s key provisions came into force in 2014, young people took the heaviest blow, with average insurance premium hikes greater than 60%.[vii]
4. The ACA discourages small businesses from growing and hiring.
Employers with fifty or more full time equivalent employees are required to offer government-approved health insurance or face a stiff tax penalties. This discourages small businesses from growing and hiring more workers, lest they take on the substantial costs and regulatory burdens that accompany expansion.[viii]
5. ACA inflicts costly compliance burdens on America’s job creators that force them to reduce worker hours, wages and benefits.
In a 2015 International Foundation of Employee Benefit Plans survey, almost 57% of businesses stated that the biggest ACA challenge they faced related to administrative burdens, while 70% reported that the ACA had a “very negative” or “somewhat negative” effect on their business.[ix] The ACA directly increased costs for 82.2% of businesses surveyed, and 55.7% reported that general ACA administrative costs were a top driver of this increase, including reporting, disclosure, notification, and having to change their health insurance plan designs.[x] The survey also notes that these ACA costs forced businesses to reduce the number of full-time employees, cut wages or other benefits, or shift healthcare costs to their employees.
[i] Wogan, J.B., “No cut in premiums for typical family”, Politifact, August 31, 2012. http://www.politifact.com/truth-o-meter/promises/obameter/promise/521/cut-cost-typical-familys-health-insurance-premium-/
[ii] Gaba, Charles. “Presenting the ACA Signups 2017 Requested Rate Hike Challenge!!” ACASignups.net, May 13, 2016. http://acasignups.net/16/05/16/presenting-aca-signups-2017-requested-rate-hike-challenge
“Health Insurance Marketplace 2016: Average Premiums After Advance Premium Tax Credits in the 38 States Using the Healthcare.gov Eligibility and Enrollment Platform,” Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation, January 21, 2016, Page 15. https://aspe.hhs.gov/sites/default/files/pdf/172176/2016HealthInsurance.pdf
“Cost of Future Newly Insured under the Affordable Care Act,” Society of Actuaries, March 2013, Page 7. http://cdn-files.soa.org/web/research-cost-aca-report.pdf
[iv] “How CBO Estimates the Effects of the Affordable Care Act on the Labor Market,” The Congressional Budget Office, December 2015, Pages 17-18. https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51065-ACA_Labor_Market_Effects_WP.pdf
[v] “Overview: Final Rule for Health Insurance Market Reform,” Centers for Medicare and Medicaid Services, February 27, 2013, Page 2. https://www.cms.gov/CCIIO/Resources/Files/Downloads/market-rules-technical-summary-2-27-2013.pdf
[vi] “If you don’t have health insurance: How much you’ll pay,” Healthcare.gov, Accessed May 17, 2016. https://www.healthcare.gov/fees/fee-for-not-being-covered/
[vii] Coleman, Kev and Jesse Geneson, “Without Subsidies Women & Men, Old & Young Average Higher Monthly Premiums with Obamacare,” HealthPocket, October 29, 2014. https://www.healthpocket.com/healthcare-research/infostat/obamacare-2014-premiums-higher-than-pre-reform-market#.VzoIZPkrKUk
[viii] Mulligan, Casey. “Testimony Before the Joint Economic Committee,” June 3, 2015, Pages 5-6, Table 2. https://www.jec.senate.gov/public/_cache/files/d0d17590-6762-4af0-b508-95c0ed6b0a82/mulligan-testimony.pdf
[ix] “2015 Employer-Sponsored Health Care: ACA’s Impact,” International Foundation of Employee Benefit Plans, 2015, Pages 8, 34. http://www.ehd-ins.com/assets/2015/07/HCR-Federal-Courts-Issue-Conflicting-Rulings-on-Subsidies-in-Federal-Exc....pdf