Bidenomics is driving up the cost of health care.
In the release of its annual survey of employer health benefits, the Kaiser Family Foundation notes: “Amid rising inflation, annual family premiums for employer-sponsored health insurance climbed 7% on average this year to reach $23,968, a sharp departure from virtually no growth in premiums last year, the 2023 benchmark KFF Employer Health Benefits Survey finds.”
When looked at in isolation, we will likely hear calls for more government intervention to “fix” the employer market. But employer-based coverage is only part of the larger health care coverage ecosystem. When looked at more broadly, those areas where the government is in charge, the landscape does not look much better.
Take Medicare. Medicare premiums are on the rise. In October, the Centers for Medicare and Medicaid Services announced Medicare premiums will increase by almost $10 per month for 2024.
The Medicare Part B monthly premiums for seniors will increase from $164.90 to $174.70. The increase is reported to be mainly due to increased health care spending.
This is not the first time seniors will face a jump in premiums. In 2022, the first full year of the Biden administration, Medicare saw one of the largest increases in program history. Premiums jumped 14.5%, a historic increase that Centers for Medicare & Medicaid Services attributed to rising health care prices and utilization.
In Medicaid, the joint federal-state health care program for the poor, spending is also on the rise, especially for the states. Total spending (both federal and state spending), which by design is intended to limit enrollee premium exposure, peaked at 12.5% in 2022.
Now with the end of the COVID-19 emergency that provided a temporary increase in federal support, the share of costs will return to normal levels. While total Medicaid spending is expected to slow, the state share is expected to increase as those emergency federal subsidies that shielded costs from the states goes away.
States are projected to see a 16.3% increase in their share of costs.
The supposed “Affordable” Care Act is not faring much better. Obamacare premiums for 2024 are expected to be trending upward as well. Analysis of insurance plan filings finds the median proposed premium increase of 6%. Like other coverage, these premium increases are being attributed to higher prices for medical care and increased utilization.
Looking forward, the health plans surveyed expect “broader economic inflation to flow through to the health system and put upward pressure on premiums … as well as on insurers’ administrative costs, such as their own staffing costs.”
Of course, not all Americans will feel these increases the same way. In employer plans, employers use a variety of strategies to manage costs for themselves and their workers. Depending on the employer, this might mean changing the benefits package design, cost-sharing arrangements, or integration of new models for care delivery.
In Medicare, higher premiums mean smaller Social Security checks for retirees. In Medicaid, it likely means more limited access to care and services. In the Affordable Care Act, it means higher deductibles, less access, and fewer choices. For those who are getting an ACA subsidy that masks the true costs, it means bigger subsidies to participating insurers, more government spending, and higher costs to taxpayers.
Despite these troubling trends, the Biden administration’s plans call for more of the same.
Rather than addressing underlying issues, the Biden administration’s answer is more government—that is, more government subsidies and more government price controls.
During the COVID-19 emergency, ACA subsidies were enhanced and expanded. These temporary boosts are set to expire at the end of 2025. Yet, the Biden administration has already revealed its aims to make them permanent.
In Medicare, the so-called Inflation Reduction Act inserted new government price controls, including an enormous new excise tax, on prescription drugs. Thanks to the Inflation Reduction Act, there will be less innovation and fewer life-changing drugs for patients.
In Medicaid, the Biden administration’s policy is to ignore the fiscal and demographic challenges bubbling to the surface, and instead, fixate on expanding the program and spending money at all costs to do it.
For health care, all of this makes the economic outlook worse. As Heritage Foundation research fellow E.J. Antoni points out: “Growth in government spending is crowding out the private economy, slowing growth, accelerating inflation, and making people worse off. This new data should be a wakeup call for Congress to the nation’s financial plight.”
Government intervention is the problem, not the solution.
This article has been corrected to reflect that Medicare saw one of the largest program increases in 2022.
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