Obamacare will cost Michiganians dearly, Parente writes. (Dale G. Young / The Detroit News)
Michigan, buckle up. Over the next few months, you will learn how much your health insurance premiums will go up for next year. The early evidence isn’t good — the percentage increase could be in the double digits.
But that’s nothing compared to what you’ll face in 2017. In May, I released a comprehensive study showing how the Affordable Care Act — otherwise known as Obamacare — will likely play out in Michigan over the next few years.
In two years, the health care overhaul’s structural problems will lead to substantial premium increases. Once that happens, Michiganians will likely leave the insurance market in droves. They’ll have little choice — they won’t be able to afford insurance because federal subsidies won’t keep up with rapid price increases. Within a decade, this could swell the ranks of the state’s uninsured by 64 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 health care law- related rulings.
But why won’t this happen until 2017? Because that’s the year when the Affordable Care Act goes into full effect and certain provisions begin to sunset.
Two big changes will occur that year: Insurance companies will no longer have access to the health care law’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. When these two programs end, the insurance industry won’t have access to taxpayer money.
That leaves Michiganians to pick up the tab. Without taxpayer money, insurers will increase plan premiums to cover the sudden shortfall. They’ll have no other choice — the other option is to go out of business.
You might not have a choice, either. The data predicts that the average premiums for a bronze family plan in Michigan may jump from $13,218 to $17,180 — an increase of 30 percent.
This will cause a chain reaction in the insurance market. As people leave the exchanges, insurers will have fewer customers who can shoulder health care costs. Thus, for 2018, they’ll have to raise prices again — which will only cause more people to leave.
Employer health care coverage won’t stem the losses. After 2016, many businesses will stop offering health insurance because it’s also getting too expensive for them. I estimate that over 475,000 people could lose employer coverage in Michigan over the next decade.
This rapid turn of events leaves more Michiganians who need health insurance from the exchanges. Those same exchanges, meanwhile, are hemorrhaging customers because they’re becoming more expensive every year. Stuck in this cycle, many will find the IRS “shared responsibility fee” — the tax for not having health insurance — a far cheaper option. This could increase the number of uninsured by 64 percent to over 2 million people in 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 while leaving more Michiganians uninsured.
Dr. Stephen Parente is a professor of Health Finance, the Associate Dean of the Carlson School of Management, and the www.carlsonschool.umn.edu/faculty-research/paren010/Stephen_T_Parente.aspxat the University of Minnesota.