The Affordable Care Act – Still Making A Killing

It’s been over a year since people began to sign up for new health insurance linked to the Affordable Care Act (ACA). The Obama administration says it’s a huge success. And this is sort of true. The program is succeeding at what it set out to do: to deliver more customers to the health care industry and promise greater profits.

According to the Obama administration, about 7.1 million people signed up around the country. But many of them were not part of the 50 million uninsured in this country. Before the new health care sign-ups began, health insurance companies kicked off an estimated six million people from their plans. So, there has only been a slight increase in the number of people with health insurance in the U.S.

The health insurance companies are getting exactly what they wanted – more people signing up for more expensive insurance. On average the largest insurance companies increased their overall income by about 13 percent for 2014. In every case, the companies explain that their new income has come from new customers after the ACA enrollment period. Their increased profit is no surprise since insurance companies increased their premiums by an average of 13 percent, and even as high as 100 percent in some states –  California was at 53 percent.

In most cases, patients are choosing the cheapest plans offered through the ACA with the lowest premiums. But insurance companies have made up for it by increasing the amount patients pay out of pocket for care – co-pays have increased along with the amount the patient is expected to pay for services. Out-of-pocket costs totaled about $320.2 billion last year, the highest on record, an increase of 4.1 percent from the previous year. This is more profit for the insurance companies, and also the hospitals as they charge more for services.

Also record numbers of patients who do have health insurance are avoiding going to the doctor because their deductibles are so high. Patient doctor visits declined by about three percent so far for 2014. In fact, the leading companies in the health insurance industry claim this is one of the main reasons for their increase in profits – they bring in more from insurance premiums than they pay out for patients.

About 85 percent of new insurance sign-ups under the ACA are from people who qualify for some kind of federal subsidy or tax cut. But again, these subsidies go straight to the insurance companies, and go to plans with high co-pays. Even with the subsidies, patients can still have to pay about 20 percent of their income in insurance costs.

But many patients are too poor to even qualify for the government subsidies, so they have to rely on Medicaid – but only if they qualify. Many states have not expanded coverage to make up for the new patients that are too poor for insurance subsidies but not poor enough for their state’s current Medicaid requirements. These patients are still left with no health coverage at all. And those that do qualify for Medicaid are faced with hugely reduced services because federal and state governments have been making major cuts to Medicaid services.

Another impact of the ACA has been the incentive for large companies to cut off paying for health care for part-time employees working less than 30 hours per week. So, Target, Home Depot, Walmart and others have cut off any health care coverage for their part-time employees because the ACA doesn’t require it.

Overall the balance sheet is clear: This is a health care system for profit. And that’s exactly what the Affordable Care Act has improved – their profits.