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Health reform not as predicted: How self-insured health plans can sustain coverage

May 15, 2023

We have yet to see the full impact of recent inflation on health care prices. How those increases, and continued deficit spending, will ripple through the economy is unknowable at this time. Suffice to say that health care costs will not decline in 2024.

Not as predicted: The future of employer-sponsored coverage after health reform
Long ago, two of the architects of Health Reform predicted that employer-sponsored health coverage would decline significantly by 2025 (two years from now):

• “By 2025, few private-sector employers will still be providing health insurance,” declares Ezekiel J. Emanuel, author of Reinventing American Health Care (Public Affairs, 2014) and advisor to the Obama administration during the drafting of the ACA.

• “The very likely prediction over the near term is that slight erosion continues in employer-sponsored insurance, over a longer term—say, a 25- to 50-year horizon—only the biggest employers may be still in the game.” says Jonathan Gruber, Massachusetts Institute of Technology economics professor who helped craft the ACA.

However, like the other predictions (keep your doctor, keep your plan, reduce costs, avoid deficit spending), the experts and proponents of Health Reform have been wrong. Employer-sponsored health benefits have persisted.

A study by the Employee Benefit Research Institute (EBRI) and the Commonwealth Fund, What Employers Say About the Future of Employer-Sponsored Health Insurance, identifies the conditions that might lead employers to stop providing health benefits. Study findings revealed that employers often view themselves as paternalistic: they wish to make it easier for their workers to get affordable health coverage. Accordingly, those interviewed found it difficult to imagine future circumstances that would lead their companies to stop providing health coverage. However, should we see additional policy initiatives, such as the extension of ACA subsidies and the provision of a public option, employers may reconsider their practice of offering health benefits to their workers.

Not as predicted: Health reform impacts annual deficits and national debt
Since the passage of Health Reform, annual deficits have added $19T+ to the national debt. America is now $31T+ in debt, in addition to significant underfunding of entitlements like Social Security and Medicare. We know of no estimate that isolated the impact of Health Reform on annual deficits and additions to the national debt. However, post-pandemic, federal government health care spending is now $1.9T a year, almost $1 of every $3 of federal spending. For comparison, over the past 13 years, federal government health spending increased 7.5% per year from “only” $743B.”

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