Rising Costs: A Health Care Challenge For Democrats

by Julie Rovner for NPR –

For Democrats, passing the new health care law may have been the easy part. Now that it’s the law, everything that happens in health care, whether due to the Patient Protection and Affordable Care Act or not, is their responsibility.

“The Democrats have guaranteed that the American health care system is going to be affordable. They put it in the title of their bill,” health policy analyst Bob Laszewski said. “So everything that happens after March 23, 2010 [the day President Obama signed the measure] is theirs. They own it.”

Democrats came under fire from Republicans on Monday for the latest set of regulations they issued. The new rules lay out which insurance plans can remain as is when new consumer protections and other requirements take effect.

“This rule reflects the president’s policy that Americans should be able to keep their health plan and doctor if they want,” Health and Human Services Secretary Kathleen Sebelius said.

But plans won’t be able to remain “grandfathered” if they raise premiums too much, or cut too many benefits. Sebelius said the idea was to create a balance, “to make sure the grandfathered plans still have the flexibility they need to make reasonable changes, but also making sure that insurance companies don’t use this additional flexibility to take advantage of their customers.”

Republicans, however, were quick to point out that by the department’s own estimates, many insurance plans would not qualify to remain unchanged.

Despite repeated promises by President Obama to the contrary, said Senate Minority Leader Mitch McConnell (R-KY), “the government is about to change the plans most Americans have. Here’s one more promise the administration has broken on health care and one more warning Republicans issued on this bill that’s been vindicated.”

What Republicans don’t say is that plans that do have to change will have to offer more, rather than fewer, benefits and consumer protections. That includes things such as free preventive services and guaranteed direct access to obstetrician/gynecologists for women.

But most of those new benefits won’t take effect for another three years. What makes Democrats more immediately vulnerable is what’s going to happen to people’s health insurance costs next year. They’re going up.

At least that’s the finding of a new report from the consulting group PricewaterhouseCoopers.

“I think you can expect to continue to see significant increases in what you pay for your health care,” says Mike Thompson, a principal with the firm and the study’s lead author.

In order to cope with a projected medical inflation rate of 9 percent next year, Thompson says, he expects that employers will load more costs onto workers, both through higher deductibles and by replacing flat co-payments with percentage coinsurance. In other words, rather than paying a flat $20 fee to see a doctor, more workers will be expected to contribute 20 percent of that doctor’s bill.

Both Thompson and Laszewski say next year’s rising costs aren’t due to the new health law. And none of the new law’s provisions intended to restrain health spending have yet to take effect. But those are subtleties likely to be lost on most of the public. They’re simply going to wonder why their costs keep going up.

“I myself would not have called it the ‘affordable’ health care act,” Laszewski says. “I think that’s making a promise you’re not likely to be able to keep.”