By Stephen T. Parente
Pennsylvania, buckle up. Over the next few months, you'll learn how much your health-insurance premiums will go up for next year. The early evidence suggests the percentage increase could be in the double digits.
But that will be nothing compared with what you'll face in 2017. On behalf of the Medical Industry Leadership Institute, I recently released a comprehensive study showing how the Affordable Care Act - otherwise known as Obamacare - will likely play out over the next few years. The diagnosis isn't good.
First, the short version. In two years, the ACA's structural problems will lead to substantial premium increases. Once that happens, Pennsylvanians will likely leave the insurance market in droves. They'll have little choice. They won't be able to afford health insurance because federal subsidies won't keep up with the rapid price increases. Within a decade, this could swell the ranks of the uninsured by nearly 11 percent.
I reached this conclusion by using a peer-reviewed economic model published in several health journals. It was funded by both private and government sources, including the Department of Health and Human Services, and has been cited by multiple Supreme Court justices in ACA-related rulings.
Why is 2017 significant? That's the year when the Affordable Care Act goes into full effect and certain temporary provisions begin to sunset. The changes will affect all plans sold for 2017 and beyond.
Two big changes will occur that year: Insurance companies will no longer have access to the ACA's "re-insurance" and "risk corridor" programs. The first item currently allows insurers to bill the government for the most expensive patients; the second one guarantees that the industry's losses will be subsidized by you, the taxpayer. When these two programs end, the insurance industry won't have access to taxpayer money.
That would leave Pennsylvanians, as well as taxpayers in other states, to pick up the tab. Without taxpayer subsidies, insurers in the state would increase plan premiums to cover the sudden shortfall. They would have no other choice - the other option would be to go out of business.
You might not have a choice, either. The data predicts that the average 2017 premiums for a bronze family plan may jump from $8,810 to $12,861 - an increase of 46 percent. Undoubtedly, this would be far too expensive for many people. Being uninsured may then be the only financially sound option.
A mass exodus would cause a chain reaction in the insurance market. As people leave the exchanges, insurers would have fewer customers who could shoulder health-care costs. Thus, for 2018, they would have to raise prices again - which would only cause more people to leave. This cycle could repeat itself indefinitely.
Employer health-care coverage would be unlikely to stem the losses. After 2016, many businesses would stop offering health insurance because it would also be getting too expensive for them. I estimate that more than 14 million people could lose employer coverage over the next decade.
As this unfolds, more and more Pennsylvanians will turn to the exchanges for health insurance. Those same exchanges, meanwhile, will hemorrhage customers who can't afford the ever-more-expensive premiums.
Stuck in this cycle, many would find the IRS "shared responsibility fee" - the tax for not having health insurance - a far cheaper option. My analysis indicates that this could increase the number of uninsured by nearly 11 percent - to more than 40 million people within a decade.
Think of what this means for the Affordable Care Act. Its architects promised that it would make health care cheaper, while providing universal health care. Instead, it will make health care unaffordable for many, while leaving more Pennsylvanians uninsured. How will taxpayers react when they find out this health-care cure may be worse than the disease?