Rather than stabilizing in 2016 as many experts predicted, the Affordable Care Act (ACA) is leading to large premium hikes and less choice and competition in the individual insurance market as plans prove unattractive to relatively young, healthy, and middle-class people. In order to achieve a better understanding of the ACA’s impact, a new Mercatus Center working paper compared insurers’ performance selling individual Qualified Health Plans (QHPs) with three other markets: the individual non-QHP market, the small group QHP market and the small group non-QHP market.
The impact of regulation on economic growth has been widely studied, but most research has focused on a narrow set of regulations, industries, or both. These studies typically rely on regulatory indexes that measure subsets of all regulation, on country-to-country comparisons, on short time spans, or on surveys in which experts report how regulated they believe their country or industry is. In order to better understand the cumulative cost of regulation, a comprehensive look at all regulations across many industries over a long period of time is imperative.A new study for the Mercatus Center at George Mason University uses an economic model that examines regulation’s effect on firms’ investment choices. Using a 22-industry dataset that covers 1977 through 2012, the study finds that regulation—by distorting the investment choices that lead to innovation—has created a considerable drag on the economy, amounting to an average reduction in the annual growth rate of the US gross domestic product (GDP) of 0.8 percent.
Could such a plan win approval by Congress? Ummm, maybe. Two factors weigh in its favor: first, the fact that after selling Obamacare as a program for middle-class families who were anxious about losing their coverage if something went wrong, Democrats delivered a plan that made a lot of middle-class families worse off, and few of them better off.Most of the benefits have flowed to people making less than 250% of the poverty line, while most of the costs — in the form of taxes, more expensive and less generous insurance plans, and reduced consumer choice — were borne by folks above that level, including folks who aren’t really all that far above that level. Those people are angry, and they’re more likely to vote than the program’s beneficiaries.
The second thing that might make such a plan politically viable is the continuing problems in the insurance exchanges. Until prices stabilize, we remain at risk of seeing the number of uninsured start to march back upward, as unsubsidized consumers start to drop their high-priced, high-deductible, narrow-network insurance. Those drops will be concentrated in people who don’t qualify for subsidies, and as mentioned in the paragraph above, those folks are more likely to vote than the beneficiaries.
The Last Embassy: ACA/Obamacare: When the Price Isn’t The Price Because The Price Is a Political PriceJune 24, 2016
“Amid reports that consumers could be hit with Obamacare health insurance premium hikes of 10 percent or more, the administration is providing state insurance regulators with $22 million to encourage them to beef up their reviews of requests for rate hikes from the health insurance industry.