Negative Consequences of Health Reform Already Felt

Health Issues

March 8, 2011

The negative consequences of the Patient Protection and Affordable Care Act already are cascading through the health sector. Even though most of the provisions of the health overhaul law do not go into effect until 2014, its destructive impact already is being felt by senior citizens, children, and small and medium-sized employers, says Grace-Marie Turner, president of the Galen Institute.

One of the earliest indications of lost coverage came in June 2010 when Health and Human Services Secretary Kathleen Sebelius told health insurers that they must write policies for children under age 19, including those with pre-existing conditions, no matter when their parents apply.

Rather than face the very real prospect that most parents would wait to buy the coverage when the children had a significant medical condition, many carriers have decided to leave this market altogether.

Texas has seen all of its carriers drop child-only health insurance, as have other large states including Florida and Illinois.

Seniors were also hit early with the news that their carriers were leaving the market as a direct result of impact of the health overhaul law.

More than 11 million seniors have opted to join private Medicare Advantage plans that offer more generous benefits and lower out-of-pocket costs than traditional Medicare.

But to pay for expanded entitlements for working-age Americans, the law slashes spending on these private plans.

Chief Medicare actuary Richard S. Foster estimates that total enrollment in Medicare Advantage plans will be cut in half, by as many as 7.4 million over the next 10 years.

Small businesses are among the first to be negatively impacted in the group insurance market. In Colorado, for example, Aetna will stop selling new health insurance to small groups and is moving existing clients off the plan this year, affecting 1,200 companies and 5,200 employees and their dependents.

Source: Grace-Marie Turner, "Negative Consequences of Health Law Force Health Insurers to Withdraw from Markets Across the Country," Galen Institute, February 25, 2011.

For text:  http://www.galen.org/fileuploads/Health_Insurers_Withdraw_from_Markets.pdf