One year later, where are the higher healthcare costs?

One year into the life of the healthcare overhaul bill passed by President Obama and the Democrats in Congress, and really I think you would be hard pressed to find too many people screaming for the bill to be stricken down (other than Tea Party members, of course).

The reality of the thing is that, while Republicans have frequently called for skyrocketing healthcare costs and denial of services, it would be disingenuous to say that these things have yet to materialize.

That’s not to say the bill is broadly popular, by any means. Just that it is not experiencing any sort of backlash, visible to the common beholder. A recent Gallop poll shows 46% of Americans in support of the measure, while 40% are opposed to it. Juan Williams for Fox News wrote about the subject today, calling the situation “sunny.”

Kirsten Powers, on the same news site, came out calling for a public acceptance of the bill for all of its qualities (and shifting blame for its vices on the age old causes of skyrocketing healthcare costs; remind me, what was this bill supposed to be doing again?).

However, beneath the surface is a torrent of activity which, if revealed, would likely surprise the average citizen.

The best way to see this activity is through the eyes of one of the benefits consultants currently involved with the companies that are dealing with the new costs and regulation. For instance, Towers Watson has been aggressively interpreting information as it has materialized, putting much of that on the front of their website. I know of a few other consultant groups who are providing similar fast paced advisement services.

Healthcare overhaul is going to be the big thing this year; and that’s saying a lot, as it wasn’t exactly a small thing last year.

Going into last year, only 14% of respondents in a Towers Watson survey said they thought the Patient Protection and Affordable Care Act would help keep costs down, although 96% said that was a high priority to them.

Only 20% thought that the reforms would improve quality of care.

These numbers are quite significant, as they represent the general mood of business towards the act. Keep in mind, health costs are a large portion of any responsible corporations budget; business owners have been very tepid about spending money and budgeting over the last year.

Still, despite the concern of HR departments and management the country over, it appears as though their worries were blown out of proportion, doesn’t it?

Unfortunately, no.

You see, last year, carriers (most notably the big ones, like Blue Cross Blue Shield) went and did exactly what you would expect from savvy corporations.

Facing uncertainty and understanding that most provisions would not be fully understood for some time thereafter, they knew that reacting at the moment was pointless. And they also understood that if they rushed to raise rates when everyone was looking at the issue they would be painted as opportunistic, greedy, bloodsucking monsters. So many of these carriers moved to conform to the new law immediately, despite being grandfathered in for a couple years more.

And they ate the costs.

However, those happy days are done. These companies have been taking losses, giving out services for less than free. They did so for the purpose of expediency. However, the changes are coming.

And the unfortunate reality is that, this year, employers who were already scrambling from needing to implement the legislation themselves are about to get hit hard; a cost increase likely double to what they’re used to. One part of that increase is for going forward. One part is retroactive pricing for the free six months – one year that the carriers were giving out.

That’s if they’re lucky. Plenty are getting nailed to the tune of 20% cost increases or greater.

If you’re in an HR group, you probably already know this. But if you’re an employee, let me give you an intro to some new terminology you’ll be getting to know intricately very soon.

• Copay – this will bring new meaning to the word. The only thing that can’t be touched under Obamacare is preventative services. But that leaves a lot that can be touched.

• Deductibles – I bet every plan in the next five years will have a deductible; carriers will not be offering any plan that doesn’t have one. No more effortless services; they want you to share the pain, so you think twice about whether you need that pain medication (did you catch the irony?).

• Consumer Driven Health Plans – this one is probably new to most of you. Just understand, it functions as a series of accounts where your cost depends on your usage; much like everything else in life. You will be required to put away money into a tax free account that pays no interest and gets wiped clean every year. It will be an immense headache to most of you, and you will hate these plans very much.

• Generic Drugs – Rx costs are the number one growing segment in healthcare, already accounting for something like one third of gross expenses. Guess what? Purchases of brand name drugs will be paid for in blood, for you certainly will not be paying for them in dollars. Preferred brand names will cost as much as 8x more than generics. Non-preferred will…well, just don’t ask.

• Spousal De-coverage – guess whose significant other won’t be getting under your plan if they have coverage elsewhere? Did you guess, “mine?”

• Benefit Cuts – Even if it looks like nothing has changed…it probably has. Small tweaks, like in the definition of what constitutes “necessary” or an “accident” will probably floor you the first time you get stuck with a $700 bill after an unapproved visit to the ER.

• Per Member Costs – Up until now, a group of three or more has been billed as a family, regardless of whether that meant a man, a woman, and a child, or a man and his six illegitimate offspring. Now, many plans will start forcing you to pay for your children’s coverage, since they will be responsible for your offspring for much longer. Just remember, just because coverage can’t be denied, doesn’t mean coverage is free.

You see, friends, nothing is free. There are always trade offs – yours just got delayed a bit. Renewal dates for health plans will come as a nasty surprise for many of you, as you get socked with deep cuts to things you took for granted. These cuts will most likely be the equivalent of a 10-12% decrease in the cost of your health plan to your company. To you, that would likely translate to an increase of somewhere between 80-200% in fees from what you are paying now. Whether you actually pay that much more, or just have value secretly denied you, remains up to your employer. However, the necessity to trim does not.

Folks like Mr. Williams and Mrs. Powers have been asking, “where is all the suffering that everyone was screaming about?” The answer is:

It’s coming.

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