How Has the Affordable Care Act Affected the Cost of Care

Since the Affordable Care Act (ACA) became the law of the land in 2010 and later implemented into the markets in 2014, it has had a dramatic effect on the costs of healthcare in the United States.  Whether for good or for bad, is a variable we haven’t quite determined.
With limited data only recently becoming available, we are beginning to see a bigger picture of how the ACA is affecting healthcare costs throughout Texas. One of the largest increases in healthcare has taken place in the pharmaceutical industry.
Correspondingly, the ACA doesn’t have hard and fast rules regarding what pharmaceutical manufacturers may charge for their products. This has led to more expensive prices being passed on to consumers.
Let’s dive a bit deeper into how the costs of drugs has increased during the past two years under the ACA.

Pharmaceutical Drug Costs

One of President Obama’s key points in the ACA was the promise of lowered pharmaceutical drug costs. The question is, have those promises come to fruition? In a word, no.
Between 2013 and 2014, generic drug groups and their pricing increased by 100 percent, according to Forbes. Other specialty generic drugs, the drug group responsible for keeping a lid on high drug costs, have risen as much as 4,000 percent from 2013 to 2014, according to the Health Affairs Blog.
For many years, Americans relied on generic brand pharmaceuticals to afford their medications. In fact, they account for approximately 80 percent of all prescriptions. A recent report released by AARP Policy Institute, found that the cost of 280 basket drugs fell only by 4 percent in 2013, which is the slowest rate of decline in 7 years.

Another related increase was brought to light by a USA Today report that showed prescription drug costs have raised 13% in 2014, higher than any other rate in a decade. However, it isn’t clear that these costs are directly related to the ACA. Worth mentioning, though, is the federal fee imposed on branded prescription drugs. This fee could very well be causing drug prescription prices to rise in conjunction with other fees brought on by the ACA.

One of the nation’s leading pharmacy benefits organizations, Express Scripts, says that prescription drug costs have nearly doubled in the last five years. The organization blamed the costs on scheming pharmacies and opportunistic manufacturers who have moved into the market.
In Texas, however, people with Medicare have enjoyed a lower cost for their medications, especially seniors. In 2014, 345,452 individuals in Texas saved $326 million per beneficiary. The costs directly related to pharmaceutical drugs are not necessarily impacting the costs individuals are paying for their medications.

Doctor Costs

Another area of concern is the costs associated with equipment doctors need to heal patients. A survey of physicians showed that 61% reported an increase in overhead costs. Electronic medical records and administrative costs that must comply with the ACA have caused doctors to increase their prices.
Adding to this the fact that Blue Cross Blue Shield, Texas’ largest insurer, has said they are seeking premium increases of 60% over one year in their HMO plans thanks to the ACA.  We are beginning to get a clearer picture as to how the ACA is affecting Texas healthcare costs.

How All this Affects Insurance Rates in Texas

When the healthcare plans under the affordable care act started in 2014, premiums were set extremely low. Now that the care act is set in stone, insurers are set to seek higher insurance premiums to level their costs. Unfortunately, Primary Care Insurance Solutions is finding out that  premium  are going to increase in 2017, even in Texas.

By increasing the rates of insurance premiums, individual and group rate plans will undoubtedly be affected. From pharmaceuticals, healthcare costs, to facilities there are countless increases in costs as an indirect cause of the Affordable Care Act. Interestingly, group employer insurance has resulted in significant cost-savings for those participating in the new law.
Above all, the ACA was designed to support and heal an out of control healthcare marketplace. Unfortunately, there have been some unintended consequences of these changes. In Texas, the battle continues to rage on with state legislatures fighting parts of the law including the Medicare expansion.
At Primary Care Insurance Solutions we agree that over the next decade we will begin to understand the full implications of the Affordable Care Act. Until then, we will have to watch as the market fluctuates and premiums rise and fall.

For any questions about this topic or other topics please feel free to contact us!