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The Obama administration said that it would give insurers more time to
figure out next year's rates, but critics said that the administration
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"Lack of transparency is a huge political advantage. Call it
the stupidity of the American voter, or whatever, but basically that was
really, really critical to getting the thing to pass."
That was MIT economist Jonathan Gruber, one of the key architects
of ObamaCare, explaining how ObamaCare was purposefully designed to obfuscate
how it was financed, how the subsidies worked and other unpleasant features of
the law.
"If you made it explicit that healthy people were going to
pay and sick people get money, it would not have passed," Gruber said,
adding that the bill "was written in a tortured way to make sure the
CBO(Congressional Budget Office) did not score the mandate as a tax."
Gruber's comments, made at a 2013 conference but just now making
the rounds on the Internet, are the polar opposite of what Democrats promised
the public.
At a 2010 White House summit held shortly before ObamaCare became
law, then-House Majority Leader Steny Hoyer, D-Md., explained that a central
goal of ObamaCare was to make the entire system more transparent.
"An open, transparent market will bring down costs, we
believe," he said.
Obama himself frequently talked about the problem of hidden health
costs, and administration officials promised, "Price transparency will be
an important part of our efforts to reform health care."
More than four years after Obama signed ObamaCare into law, it's
become increasingly clear that Gruber wasn't exaggerating. The law's vast web
of accounting gimmicks, cross subsidies, taxes and fees makes it increasingly
difficult to know what ObamaCare costs of care from consumers, businesses and
taxpayers.
Hidden Premiums
Healthcare.gov and the other exchanges were originally supposed to
open in October, but the White House pushed the date back a month. The administration
said that it would give insurers more time to figure out next year's rates, but
critics said that the administration meant the delay to hide ObamaCare's 2015
premiums until after the midterm elections.
Shoppers could get a peek at rates for the first time this week.
Another complication is that those who automatically re-enroll in
their health plans could be in for a rude surprise. Not only could premiums be
far higher than before, but subsidies — which depend on both income and plan
prices — could be smaller.
Enrollees will be able to find out only by reapplying for coverage
through the exchanges, something that more than half of enrollees say that they
don't plan to do, according to a Bankrate survey.
Hidden Plan Costs
Far from making insurance costs more transparent, ObamaCare
appears to be making it more difficult to assess the true cost of any insurance
plan.
To keep premiums down, for example, many plans adopted narrow
provider networks, forcing patients either to go to the short list of approved
doctors and hospitals, or to pay out of pocket.
A McKinsey survey found that the share of individual market plans
with narrow networks jumped from 20% before ObamaCare went into effect to 41%
this year, with 15% now using "ultranarrow" networks.
The survey also found that close to 70% of the lowest-cost plans
sharply restricted provider networks. The restrictions could expose consumers
to significant costs.
And to make up for ObamaCare plans' low payment rates, some
providers are starting to tack on extra charges not covered by insurance, while
others are refusing to take ObamaCare patients at all. Both add new, hidden
costs to health care.
Hidden Taxpayer Costs
Unlike Social Security or Medicare, each of which relies on a
dedicated payroll tax that shows up on every pay stub, ObamaCare imposes 20
different taxes — almost all of which are hidden from plain sight.
Among them: higher taxes on many who use flexible spending
accounts and on those who claim a medical expense deduction, an excise tax on
medical devices, new taxes on insurance and drug companies, a tobacco tax hike,
a surtax on investment income, a second Medicare tax rate on upper-income
earners.
Consumers paying the higher income taxes, or paying more for
devices, insurance and so on, won't necessarily know that it's because of
ObamaCare.
Some ObamaCare costs will even show up in higher state taxes.
Kaiser Health News found that taxpayers in states that contract with private
insurers to cover Medicaid patients will end up paying hundreds of millions
more, thanks to ObamaCare's new $60 billion tax on the insurance industry.
Hidden Budget Costs
Trying to figure out how much ObamaCare costs taxpayers has become
an impossible task, according to the Congressional Budget Office.
The CBO initially said that the law would slightly reduce the
deficit over its first 10 years. But earlier this year, the CBO admitted that
it couldn't actually verify whether that forecast was accurate.
When asked this summer whether ObamaCare would, in fact, cut the
deficit, CBO head Douglas Elmendorf said "We don't know, and I think in
some important ways, we will never know."
The reason, he said, was that ObamaCare relies on a multitude of
changes to existing programs and tax rates — in addition to many new taxes — to
pay for its huge insurance subsidies. The CBO claims that it's impossible to
know whether those changes are actually working as promised.
What is known, however, is that at least two of the new taxes — on
tanning salons and medical device makers — have been producing far less revenue
than expected. The administration has also put off cuts to the Medicare
Advantage program meant to help "pay for" ObamaCare, and it changed
other parts of the law that cut revenues or increased costs.
When Republicans on the Senate Budget Committee used CBO
methodology to update ObamaCare's budget impact in the wake of these changes,
they found that it will add $131 billion to the deficit over the next decade.
Hidden Industry Costs
ObamaCare backers have been cheering the news that, overall,
premium increases for 2015 appear to be modest.
But that is at least in part the result of "bailout"
programs built into ObamaCare, which were meant to encourage the insurance
industry's participation by protecting it against losses. These temporary
"reinsurance" and "risk corridor" programs, industry
analysts say, allow insurers to hold rates artificially low in ObamaCare's
first three years to grow market share.
"We won't know what the real ObamaCare rates will be until we
see the 2017 rates, when there will be plenty of valid claim data and the
ObamaCare reinsurance program ... will have ended," explained health care
industry analyst Robert Laszewski.
A study by University of Minnesota professors Stephen T. Parente
and Michael Ramlet finds that when these industry subsidies end, the result
will be sharp premium hikes in 2017 that will, in turn, cause a sharp drop in
the number of insured.
"We estimate a significant reduction in the private insurance
market in 2017, with steady declines continuing for the rest of the
decade," they wrote.
Within a decade, Parente and Ramlet forecast, the ranks of the
uninsured will climb back to the 40 million level.
Follow John Merline on Twitter: @IBD_Jmerline.
