Conflicting Reports on Health Care Costs, Insurance Premiums

If you believe the media, costs are going up because of Obamacare. And if you believe the media, costs are going down because of Obamacare.

Confused? We are too.

We all know that health insurance is expensive because health care is expensive. And health care is expensive in part because of the utilization patterns of Americans. That’s the theory behind consumer-directed health care: if consumers have some “skin in the game,” they’ll make wiser healthcare decisions and that will have a positive impact on premiums. As we all know, CDHP adoption, especially HSA-compatible plans, has increased over the past couple years.

So, it would seem reasonable that increased consumerism could have a positive impact on utilization which should have a positive impact on health care costs and should help keep premiums under control. Something like this:

Basically, if the theories are correct, the top arrow should face one direction and the bottom arrows should face another. But, according to three articles that were all published on the same day last week, that’s not what’s happening.

UTILIZATION

As reported in the New York Times and other major news outlets, utilization seems to be increasing as a result of the health reform legislation. That should be expected since millions of Americans who were previously uninsured now have health insurance, and since health plans now cover some services (essential benefits) that may not have been covered in the past, it does seem reasonable that at least some people would be taking advantage of the more comprehensive coverage.


Source: NAHU Newswire

HEALTH CARE COSTS

According to the law of supply and demand, an increased demand for health care services should send health care costs soaring, especially since we’ve been told again and again that there aren’t enough family doctors (we have a supply shortage). But that doesn’t seem to be the case. As Bloomberg reports, health care costs are actually slowing.

HEALTH INSURANCE PREMIUMS

If health care costs really are slowing, that should be reflected in the insurance premiums our clients pay. In other words, if health insurance is expensive because health care is expensive, then if health care costs slow down, health insurance premium growth should also slow. But that’s not what Fox News is reporting.

What to believe?

Of course, we could explain all of these discrepancies by saying that “news” outlets don’t really report the news anymore – they all have their own agenda and are going to report only those stories (with an added twist) that support their agenda. But that would be cynical. Another explanation for the conflicting reports is that nobody really has any idea what’s going on.

The truth is probably somewhere in-between. Yes, the media increasingly tends to lean one way or another depending on what channel you’re watching or what publication you’re reading, but it’s also true that everyone’s still trying to figure out what’s going on, and it’s probably still too early to tell. Regardless, our clients are caught in the middle. They, too, are hearing the conflicting reports and are more confused than ever. And that means that our jobs are secure, because insurance agents, while we may not yet have all the answers, can help guide consumers to make the best health care decisions for themselves and their families.

And now for the quick plug: brokers who have their own private exchange linked to a world-class call center staffed with knowledgeable, licensed agents can help guide even more consumers through the health reform maze. Learn more here.

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