Part 2: What’s so Affordable About the Affordable Care Act?
People often ask me, “where is the ‘affordable’ in the “Affordable Care Act?” Talk about a loaded question. Allow me one nerdy moment courtesy of Milliman – the largest worldwide actuarial consulting firm. They have done the Milliman Medical Cost Index research annually since 2001. In it, they calculate the annual average medical spending for a family of four covered by an employer sponsored health plan.
In 2001, when this research started, the average medical spending cost for a family of four was $8,414. In 2015, that average cost for a family of four was $24,671. That’s a big jump. Most folks would likely say that this is because of 2010s passage of ACA. Not so fast. The effective annual trend rate between 2005 and 2010 was 8.2 percent. The annual rate of increase for each year after the ACA was passed was:
- 2011 – 7.3 percent
- 2012 – 6.9 percent
- 2013 – 6.3 percent
- 2014 – 5.4 percent
- 2015 – 6.3 percent
What’s that mean? For a family of four covered by an employer sponsored health care plan, the rate of increase in the annual average medical spending actually slowed down after the passage of the ACA. Huh? It would be interesting to understand the exact reasons for why that is. I can tell you that if it weren’t for the rising costs of prescription drugs, the annual increases would be even lower. Prescription drug costs spiked 13.6 percent between 2014 and 2015.
No Easy Solution
This just exemplifies why there isn’t an easy answer to why health care is expensive. Part of the solution may be to look no further than the mirror. Preventive care costs less. When was the last time you had your cholesterol checked? How about a pap smear?
I have this rather annoying Wii program that tells me my WiiAge is a decade older than I am. Yes. That caught my attention. Do you spend time with family and friends? How do you manage stress? Do you work on your balance as you get older? Wear a seatbelt? How about a helmet if you bike ride? Are you committed to living a lifestyle that gives you the best chance at living your most productive and happiest self?
If we all committed to the philosophy and habits that embrace prevention, the claims pool that we swim in will be a lot less expensive.