More Bad News for Obamacare

Last Thursday, for the first time, the U.S. Senate passed legislation to repeal the major provisions of the Affordable Care Act. The 52-47 vote marks the first time the Senate passed a stand-alone measure to repeal President Obama’s signature legislation. The House will need to approve the amended bill, which would eliminate the individual mandate and employer shared responsibility penalty. Among other changes, the Senate version repeals the Cadillac Tax, eliminates the “3Rs” risk adjustment programs, and repeals Medicaid expansion. Once passed by the House, it would be sent to the White House, where it will face a certain Presidential veto.

Last week it was widely reported that U.S. healthcare spending rose 5.3% last year and now tops $3 trillion or $9,523 per person. This was a sharp escalation as compared with the 3.7% average annual increase over the previous five years. I believe that higher cost-sharing resulted in reduced utilization. As Americans get used to the new normal in healthcare plan design, trend is reemerging. Also, pharmacy costs are exploding. Cost pressures are mounting.

The signs are not good for the status quo. Change is brewing and it will come. But while the devil we have isn’t perfect, we don’t know about the devil we will get.

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