Overhead Costs Still High Post Obamacare

overhead-costsThe Affordable Care Act (ACA) continues to have a major impact on ongoing overhead costs – with associated expenses expected to rise more than a quarter of a trillion dollars between 2014 and 2022. These are costs that are over and above anticipated administrative expenses had ObamaCare not been enacted.

Where is this money going? Nearly two-thirds of these new overhead costs may be attributed to supporting increased enrollment in private insurance plans, which are more costly to administer. Add to this the cost of running the exchanges, which act as brokers providing access to the new private coverage, and you’re up to $172 billion dollars in projected expense. The remaining $101 billion goes to support expansion in government programs, which are primarily Medicare and Medicaid-related.

You may think that the regulations put into place to control administrative expense, such as medical loss ratio requirements which require a certain percentage of premium dollars to be spent on health care (vs. overhead), would keep expenditures in check. However, the reality is that supporting ACA is costing more than expected – the equivalent of $1,375 per newly insured person per year.

obamacare-whitepaper

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