[Ed. – The author is associate dean of the Carlson School of Management and director of the Medical Industry Leadership Institute at the University of Minnesota.]
President Obama claims the debate over the Affordable Care Act is “over,” but in coming weeks and months expect it to intensify. Health-insurance companies will soon begin releasing preliminary rate estimates for next year’s plans. Industry experts say consumers should once again brace for significantly higher premiums.
Fearing the political fallout before November’s elections, the administration last month quietly increased by billions of dollars the “risk corridor” funds that insurance companies can use to staunch their losses.
Yet since premium growth has averaged at least 5% over the past five years, it is unlikely the law’s federal subsidies will increase enough to make up the difference in out-of-pocket premium costs. As this happens, lower- and even middle-income consumers will be forced out of the private insurance market. As my colleague at the Medical Industry Leadership Institute, Michael Ramlet, and I show in a paper publishedlast month, the law’s structural problems will take years to fully manifest.