Impact of Obama’s Health Care Law Raises Concerns in Ohio

Published November 23, 2011

A new report projects dramatic impact of President Obama’s health care law on consumers, businesses, and the insurance market in Ohio.

Ohio Lieutenant Governor and Department of Insurance Director Mary Taylor (R) released the report, which was conducted by Milliman, Inc. It shows an anticipated increase in health care premiums of between 55 percent and 85 percent prior to 2017, a decrease in employer-sponsored coverage, and expansion of government programs. Milliman also estimates the cost of operating a health care exchange in Ohio could be as high as $34 million annually.

Expanding Government, Higher Prices

Other key findings from the Milliman report include:

•    Changes would include an increase in coverage of individuals by 110 percent, or 390,000 people.

•    An increase in public program coverage of 52 percent, or more than 1 million more people.

•    A small-group coverage decrease of 28 percent, or 260,000 fewer people, and a large group coverage decrease of 27 percent, or 310,000 fewer lives.

•    Premium increases above inflation and the current medical trend would include 55 to 85 percent in the individual market, depending on the person’s health status (some individuals may see their premiums increase by 90-130 percent because of their health status).

•    A small group premium cost increase of 5 to 15 percent (some small groups may see increases of up to 150 percent and decreases of 40 percent depending on the group’s health status), and a large group premium cost increase of 3 to 5 percent.

Increase in Taxpayer Burden

According to Kathryn Nix, a policy analyst for the Heritage Foundation’s Center for Health Policy Studies, the Milliman report indicates a significant increase in taxpayer-funded coverage for Ohioans.

“The most striking thing about the Milliman study is that it finds such a significant expansion in public insurance programs, by up to 52 percent. This will result in increasing taxpayer responsibility of paying for coverage through federal health care programs,” Nix said.

Nix also notes the report shows nearly half of those shifted to public programs already had insurance coverage not subsidized by taxpayers.

“The Milliman report indicates the new law will add one million Ohioans to public programs. Of those one million, nearly 50 percent already had health coverage, while 47 percent did not. What this does is expand dependence on federal health care programs to people that already had employer coverage,” Nix said.

‘Unrecognizable’ Insurance Market

The report shows the health insurance market in Ohio after 2014 will be “unrecognizable,” says John Vinci, a staff attorney at Americans for Limited Government.

“This suggests health [care] premiums may double over the next decade, so that the average family premium may be $32,175 by 2021. Ohioans are having trouble paying for health insurance now,” Vinci noted. “Obama’s law attempted to universalize health care coverage instead of addressing the real problem—the rise in underlying health care costs due to a distorted health care market that stifles competition.”

Vinci says the law will impose substantial harm on the Ohio health care market.

“It will force many employers to drop coverage altogether because it will simply be unaffordable and too unpredictable. Studies like these show we should expect employers to drop health coverage—not everyone at once and not overnight, but over time,” Vinci said.

Vinci notes Obama’s law encourages employers to shift many employees off their insurance rolls and into government-subsidized health plans.

“Employers will be forced to either drop insurance or reduce or freeze wages to compensate for rising premium costs. The scope and complexity of the law and its regulations—which are now four times the length of the original statute—have injected uncertainty into our economy when what we need is stability,” explains Vinci.

Bad Signs on Premium, Medicaid Costs

Nix says Ohioans will be paying more for their health care under Obama’s law.

“I think we’re already seeing across-the-board increases in health care premiums. Ironically, this is what the law was supposed to prevent. The consequences instead will be that younger and healthier adults are going to pay more for health insurance in the future,” said Nix.

Nix says Obana’s law “takes health care in the wrong direction.”

“It doesn’t solve the problem it was meant to solve: Rising costs. And it sends health care in the wrong direction by increasing entitlement health care spending. The first step to fixing this is to repeal the law and then replace it,” Nix said.

States will see their Medicaid burden continue to rise, she adds.

“We’re already seeing state budgets strained with Medicaid. Medicaid is already over 30 percent of Ohio’s budget. This law is going to strain states even more. Quite frankly, I don’t think we’re going to be able to afford it,” Nix said. “There will be premium increases, a larger burden on taxpayers, and larger federal deficits.”

Vinci expects a nationwide decrease in employer-sponsored coverage and expansion of government programs.

“We have a distorted market for health care services that stifles competition and encourages waste. Few people, if any, know how much their medical care actually costs. We need to return to a system that encourages competition by empowering individuals to make their own choices about health care instead of government bureaucrats and other third parties,” said Vinci.