NCPA - National Center for Policy Analysis

New Affordable Care Act Mandates Force Unnecessary Benefits

January 21, 2013

The Depart of Health and Human Services (HHS) recently finalized new Affordable Care Act (ACA) rules that will affect individuals and small businesses. The new rules highlight how the ACA is becoming increasingly expensive as mandatory coverage expands, says Sally C. Pipes, president and chief executive officer of the Pacific Research Institute.

  • Insurance plans must cover everything from mental health and drug abuse treatments to dental and vision care for children.
  • These generous health benefits will be covered regardless of a patient's need.
  • According to the Council on Affordable Health Insurance, mandates that have already become active at the state level have resulted in a 10 percent to 50 percent rise in premiums.

New rules dictate the rules for payout ratios that insurance companies must meet for care provided.

  • Deductibles and premiums are split between four groups: platinum, gold, silver and bronze, representing 90 percent, 80 percent, 70 percent and 60 percent of a patient's costs, respectively.
  • The more generous the payout ratio for a plan, the smaller the deductibles and greater the premiums will be.

The Institute of Medicine previously warned HHS that these costs may limit insurance provider's ability to offer the coverage envisioned by the ACA. The finalized rules also limit deductibles to $2,000 and $4,000 for individuals and families, respectively.

  • High deductibles, unlike those set by the new rules, keep health spending down and encourage consumers to make more conscientious and cost-effective decisions.
  • A study by the RAND Corporation found that the growth of overall health care costs slowed during the mid-2000s when consumer-directed health plans like the health savings account expanded.

The new rules also mandate how much insurance companies can charge patients, which will skew actual expenses away from the sick and elderly (who incur the most expense) toward the healthy (who incur fewer expenses).

  • Consumers ages 18 through 24 can expect a 45 percent jump in their premiums because of these new mandates.
  • Consumers ages 25 to 29 should expect a 35 percent jump.

Source: Sally Pipes, "ObamaCare's Not-So Essential Benefits," Pacific Research Institute, January 8, 2013.


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