Friday, August 08, 2014

GUEST COLUMN: The Shocking Price of the Affordable Care Act

By Congressman Joe Pitts

The law was sold to Americans as a plan to save money on health insurance. However, the way it works out is that some save, while others pay a whole lot more. Plans on the new federal exchanges are generally more expensive than equivalent coverage available before the law.

A detailed county-by-county analysis by researchers at the Manhattan Institute found that individual market premiums have increased by an average of 49 percent across the country from 2013 to 2014.

Right now, health insurers are setting their rates for the next year. So far, there is little information about the premium costs in most states for 2015. Florida is the first state to provide information about what consumers will be paying.

According to the Florida Office of Insurance Regulation, premiums for plans on the Obamacare exchanges will increase by an average of 13.2 percent. The most popular plan in the state, Florida Blue, plans to raise their rates by 17.6 percent. Big government subsidies will help some, but not all, consumers afford these increases.

Over the coming months, other states will announce rate changes, including Pennsylvania. Many families are going to be shocked to find how much more money in their budget will be going to health care next year.

Recently, we got another shock when the Government Accountability Office issued their report on the total mess that is Everyone knows that was a disaster at its launch, but even though the consumer side of the website works relatively well now, behind the scenes parts of the site still aren’t built.

Government information technology programs are frequently disasters. In recent years, agencies from the IRS to Social Security to the Department of Defense have spent billions of dollars on computer systems that never worked properly. is just another disaster to add to the list. According to the GAO, government managers were primarily at fault. Work on the website started without essential information like how many states would participate or how many enrollees would need to be served. Compounding this error, the contracts for the site were constructed in a way that the government paid regardless of whether the system worked.

In September 2011, was expected to cost $56 million. By 2014, the bill had ballooned to $209 million. The cost for the data hub had increased over time from $30 million to $85 million.

Last year, in the midst of the disaster, the government tried to blame contractors and fired the principle company building A new contract with a new company was signed for $91 million, but this has already grown since the beginning of the year to $175 million. No telling how much it will be before work is completed.

The cost of final price shock is still somewhat unknown. The Affordable Care Act contains a so-called risk corridor provision. The provision is meant to smooth out insurers’ losses from new health plans on the Obamacare insurance exchanges. The risk corridor procedure typically reduces payments to plans that are doing better than projected and increases payments to those who are doing worse.

If this is done in a budget neutral fashion, it doesn’t hurt taxpayers. However, under Obamacare there may a whole lot of losers and few winners. There is great concern that the administration will use the risk corridor provision to give almost every health insurer increased payments—essentially bailing out the industry. Before the end of the year, we could see what the bill to taxpayers will be.

There are some things only the government can do, such as defending our nation. Running health care is a tremendous task, and even the smartest people in the Obama administration have failed. Government isn’t the answer and Obamacare needs to go.


US Rep. Joe Pitts is a Republican who represents Pennsylvania's 16th Congressional District in Chester, Berks and Lancaster counties.

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