# The Affordable Care Act’s Lower-Than-Projected Premiums Will Save $190 Billion **URL:** \ **Category:** Great Debates\ **Created:** [October 24, 2013, 1:50pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108 "2013-10-24T13:50:23Z")\ **Posts on this page:** 13\ **Page:** 3
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [October 25, 2013, 3:23pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/41 "2013-10-25T15:23:32Z")
> [@Fotheringay-Phipps](#): > > People in the business of predicting healthcare increases don’t take them seriously at this point. I doubt that’s true, and I have no idea how you’d know it even if it were true. I have have friends in the insurance industry who take this stuff quite seriously. As Farin points out and as I acknowledged, this is all theoretical and there are arguments about what will happen for both sides. But the question being responsed to was “How can Obamacare possibly make health costs lower?” And the answer is, _theoretically_, in lots of ways. We’ll see. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [October 25, 2013, 3:30pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/42 "2013-10-25T15:30:48Z")
> [@Richard\_Parker](#): > > I doubt that’s true, and I have no idea how you’d know it even if it were true. I have have friends in the insurance industry who take this stuff quite seriously. Sorry, my post is my cite here. I am a healthcare actuary, and part of my job is predicting these things. Not that I’ve personally made any studies myself, but what I can say is that standard assumptions used in the industry to predict future cost changes were not lowered in response to anything in the ACA. Which is what I meant about people not taking them seriously - not taking them seriously in the sense of changing assumptions about the future. It’s all highly speculative. By contrast, the costs of the ACA were upfront (although not as great as some have claimed). > [@](#): > > As Farin points out and as I acknowledged, this is all theoretical and there are arguments about what will happen for both sides. > > But the question being responsed to was “How can Obamacare possibly make health costs lower?” And the answer is, _theoretically_, in lots of ways. We’ll see. The part that I was responding to was the assertion that these hypothetical changes are not getting as much publicity as they deserve. Considering how speculative and tenuous they are, I think they’re getting too much publicity as it is. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [October 25, 2013, 3:41pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/43 "2013-10-25T15:41:59Z")
> [@Fotheringay-Phipps](#): > > Considering how speculative and tenuous they are, I think they’re getting too much publicity as it is. Healthcare costs are easily the biggest problem in this country today. Certainly in the top three. They are driving the long-term debt and spending problems; they are the principal factor squeezing the middle class; they are a huge retirement issue, etc. Just a huge huge problem, as I imagine you know as a healthcare actuary. So the fact of the passage of a bill that tried a bunch of things to tackle those costs, correlated to a clear shift in the trajectory of those costs, is a very big deal. And I assure you that the actuaries I know are absolutely taking into consideration the rate of cost increase over the last three years, whether they attribute it to the ACA or not. Could be 100% the Great Recession. Or it could be only partly the Great Recession and partly the ACA. Or something else. We’ll see more clearly in ten years. But considering that the bending the cost curve is probably more important that increasing overall insurance coverage, and considering that almost no one other than policy nerds knows anything about these measures, I continue to think they are under-reported. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [October 25, 2013, 4:05pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/44 "2013-10-25T16:05:28Z")
> [@Richard\_Parker](#): > > So the fact of the passage of a bill that tried a bunch of things to tackle those costs, correlated to a clear shift in the trajectory of those costs, is a very big deal. Certainly the passage of the ACA is a big deal. It gets a lot of coverage, as you may have noticed. But just because various components “tried” to tackle these things is not a big deal. If they work they’ll get coverage. Meanwhile their potential impact is speculation. > [@](#): > > And I assure you that the actuaries I know are absolutely taking into consideration the rate of cost increase over the last three years, whether they attribute it to the ACA or not. > > Could be 100% the Great Recession. Or it could be only partly the Great Recession and partly the ACA. Or something else. We’ll see more clearly in ten years. No one I know or know of thinks there is any possiblity that the decrease in medical inflation over the past 3 years has anything to do with the ACA. The primary provisions of the ACA that are thought to possibly decrease costs had either not taken place yet or are longer term effects. To the extent that it’s not the recession (which is generally thought to be the primary cause) it’s likely other changes, e.g. the increase in CDHP plans. > [@](#): > > But considering that the bending the cost curve is probably more important that increasing overall insurance coverage, and considering that almost no one other than policy nerds knows anything about these measures, I continue to think they are under-reported. I disagree. They get reported on all the time. Generally by people trying to pump up the benefits of the ACA, as you’re doing here, but they get reported. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [October 25, 2013, 5:45pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/45 "2013-10-25T17:45:02Z")
This construction “I don’t know anyone who thinks” is not especially persuasive, since a simple google search easily turns up experts who are opining precisely what I’m saying. That you’re not familiar with them even though you are intimately involved with the industry is more evidence that the issue hasn’t gotten enough attention in mainstream news, IMHO. [Example](http://newsatjama.jama.com/2013/02/21/jama-forum-the-forecast-slowdown-in-medicare-spending-is-more-coming/). [Another example.](http://www.pwc.com/us/en/health-industries/behind-the-numbers/index.jhtml)[Yet another example.](http://thehealthcareblog.com/blog/2012/08/09/breaking-the-curve-of-health-care-inflation/) That was like four minutes of googling. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 25, 2013, 6:08pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/46 "2013-10-25T18:08:26Z")
> [@Farin](#): > > It wouldn’t be in trouble. We’d just confiscate private deposits like Cyprus did. > > Why would you get a car if you didn’t need it? Some people seem to think that driving an out of style car diminishes their social worth or something. These same people buy expensive clothes and change them all the time. Very weird. 😃 > [@](#): > > My argument is that the ACA-provided plans don’t give enough incentive for people to actually go for it on the lower-end of the scale, except in the minority of cases. Pre-existing conditions and such. As a result, the exchanges will likely be underserving for at least this year and probably next year’s enrollment, also. I agree with this, but I suppose they thought they could only move so fast. > [@](#): > > The best risk pool is the largest risk pool. By splitting people in to different pools, the insurance companies successfully create a way to change the stakes in their favor and make more money. That inflates the overall cost we pay for health care, which isn’t good for bringing costs down. If they get expert at tweaking the new avenue that might have been created for them, they’ll get driven to obscene profits. I’m not sure that offering different plans to customers decreases the size of the risk pool. It changes payouts. But we’d need an insurance expert to know for sure. And since ACA enforces a floor on payouts to the insured versus revenue, the companies can’t make obscene profits. If they charge so much that they would make them, they will have to refund them to their customers. > [@](#): > > Saying that stocks are going up means that there will be more medical care is kinda…off. It just means that people are hoping they get huge wind falls from the possibility that the ACA strikes gold-encrusted crude oil and makes the investors rich(er). It depends on whether you think we have too little or too much health care at the moment. I think underserved populations are not getting enough preventative treatment, or fast enough treatment for illnesses. Some years ago we had a thread from a Doper who had a life-threatening ailment but who could not afford to go to the hospital and get proper care. That is the kind of thing we want to prevent. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [October 25, 2013, 6:13pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/47 "2013-10-25T18:13:23Z")
> [@Richard\_Parker](#): > > This construction “I don’t know anyone who thinks” is not especially persuasive, since a simple google search easily turns up experts who are opining precisely what I’m saying. That you’re not familiar with them even though you are intimately involved with the industry is more evidence that the issue hasn’t gotten enough attention in mainstream news, IMHO. [Example](http://newsatjama.jama.com/2013/02/21/jama-forum-the-forecast-slowdown-in-medicare-spending-is-more-coming/). [Another example.](http://www.pwc.com/us/en/health-industries/behind-the-numbers/index.jhtml)[Yet another example.](http://thehealthcareblog.com/blog/2012/08/09/breaking-the-curve-of-health-care-inflation/) These examples are people suggesting that the ACA _will_ reduce spending. What I was talking about was your implication that there was some uncertainty as to whether the slowdown over \*the last 3 years \*was related to the ACA. Your examples don’t address that, other than the third. The claim in that source says (emphasis added): > [@](#): > > When I talked to Zeke Emanuel, an oncologist and former special adviser for health policy to White House OMB director Peter Orszag, he agreed: “This is not mere chance: this is directly related to the initiation of health care reform.” **It is not the “result” of reform, Emmanuel emphasized. The reform measures that will rein in Medicare inflation have not yet been implemented.** But, he explained, providers are “anticipating the Affordable Care Act kicking in. They can’t wait until the end of 2013: They have to act today. Everywhere I go,” Emanuel, added, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’ (I emphasized that part because it’s what I wrote in my prior post.) The rest is anecdotal and speculative, from a former Obama staff member. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [October 25, 2013, 6:14pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/48 "2013-10-25T18:14:11Z")
> [@Fotheringay-Phipps](#): > > These examples are people suggesting that the ACA _will_ reduce spending. No, they aren’t. Are you gonna make me quote from them? ETA: and dismissing Zeke Emanuel’s opinion because he consulted on the ACA is especially silly. There’s a reason they were interested in his opinion in the first place, obviously. ---
**Author:** ![Farin](https://avatars.discourse-cdn.com/v4/letter/f/e79b87/32.png) [@Farin](https://boards.straightdope.com/u/Farin)\ **Post date:** [October 25, 2013, 6:32pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/49 "2013-10-25T18:32:30Z")
> [@Voyager](#): > > I agree with this, but I suppose they thought they could only move so fast. If they were going to do this, it needed to be done quick, though. It’s like taking the bold stroke of changing your business. Waiting destroys the bold stroke and makes it look like it’s falling apart. ☹ > [@Voyager](#): > > I’m not sure that offering different plans to customers decreases the size of the risk pool. It changes payouts. But we’d need an insurance expert to know for sure. And since ACA enforces a floor on payouts to the insured versus revenue, the companies can’t make obscene profits. If they charge so much that they would make them, they will have to refund them to their customers. Historically, each plan is a different risk pool. Did they change this with the Exchange offerings? I’m skeptical, but they certainly could have. The new rules about profits, though, apply to the risk pool. You have to pay at least something like 70 or 80% of premium intake out as cost, which I think the deductibles count towards. Although, now that I’m looking for that information (I read it awhile ago) I can’t find it. Hm… So, you now might have a pathway to profit for risk pools you create that are 90% filled with healthy people and 10% with mediumly expensive unhealthy people. (I’m not very clever at ripping people off. I’m sure the suits can figure better ways. 🙂 ) > [@Voyager](#): > > It depends on whether you think we have too little or too much health care at the moment. I think underserved populations are not getting enough preventative treatment, or fast enough treatment for illnesses. > Some years ago we had a thread from a Doper who had a life-threatening ailment but who could not afford to go to the hospital and get proper care. That is the kind of thing we want to prevent. I think that most people considered health care broken in the US and wanted some form of fix. I seriously applaud the things like pre-existing condiions being forced to be covered. However, this collection of the Heritage Foundation’s fantasies won’t do much to fix the actual problems that were and still are apart of the health care system in the US and, in the interim between this and something better, it will end up costing a lot of the people who aren’t well off their souls just to pay for it. I can’t align myself with the results that this law will achieve when also considering the costs involved to get there. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [October 25, 2013, 6:49pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/50 "2013-10-25T18:49:57Z")
> [@Richard\_Parker](#): > > No, they aren’t. Are you gonna make me quote from them? I’m sorry, I looked at it closer, and I see I missed one other point in the JAMA Forum article, about _Efficiency efforts_. My apologies. If I missed anything else please point it out. I think the points in the JAMA article are extremely dubious. The ACAs to this point are a drop in the bucket and it’s inconceivable that they have a real impact. The link to the reinfection study refer to a study which compares 2010 to 2009. And the readmission penalties took effect in [October of 2012](http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Readmissions-Reduction-Program.html). More below. > [@](#): > > ETA: and dismissing Zeke Emanuel’s opinion because he consulted on the ACA is especially silly. There’s a reason they were interested in his opinion in the first place, obviously. Dismissing the impact of this is especially silly. Do really think a guy is neutral about the effectiveness of a policy that he was involved in designing and/or implementing? I find this hard to believe. Especially as he was explicitly saying he was basing his conclusion on his discussions with people about their attitudes. On that note, I should also note that the lead author of the JAMA Forum was a “senior health care advisor to Barack Obama’s presidential campaign”. Give me some neutral experts. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [October 25, 2013, 6:58pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/51 "2013-10-25T18:58:08Z")
So, you want experts who have no opinion? How many climate scientists have no opinion on global warming? How many psychologists/therapist have no opinion on whether or not homosexuality is a mental disorder? ---
**Author:** ![YogSothoth](https://avatars.discourse-cdn.com/v4/letter/y/8edcca/32.png) [@YogSothoth](https://boards.straightdope.com/u/YogSothoth)\ **Post date:** [October 25, 2013, 8:33pm UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/52 "2013-10-25T20:33:03Z")
> [@elucidator](#): > > So, you want experts who have no opinion? How many climate scientists have no opinion on global warming? How many psychologists/therapist have no opinion on whether or not homosexuality is a mental disorder? He just wants scientists that share his biased opinion, that’s all. Don’t let him pretend that he’s doing this to be fair to all sides. Scientists should not be “neutral” in the sense that they do not believe strongly in anything. They should be fact-based. If the facts say one side is right and one side is wrong, a scientist should believe the facts. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [October 26, 2013, 1:47am UTC](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108/53 "2013-10-26T01:47:47Z")
I guess my point is that simply stating that the ACA will save the government money is meaningless. Under my proposed “Pay for your own medical care or else fuck off and die” plan (which admittedly needs a catchier title if it is going to get popular support) the government saves hundreds of billions of dollars per year. But it doesn’t help people get health care at an affordable cost. Until the ACA shows that it provides health care at an affordable cost (to nearly all people, not just the hand-picked ones) then we can’t say if it is a success or a failure. [Previous page](https://boards.straightdope.com/t/the-affordable-care-act-s-lower-than-projected-premiums-will-save-190-billion/672108.md?page=2)