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Jun 23, 2017
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Information Station

The Affordable Care Act was supposed to lower healthcare costs, but it has done just the opposite. Why? Because it ignored the realities of how markets work.

This video is part of a collaborative business and economics project with Job Creators Network and Information Station. To learn more, visit informationstation.org.

How do we lower health care costs? By decreasing tax burdens on insurers, reducing regulations & encouraging medical innovation.

  • Health insurers pass increased taxes on to the consumer in the form of higher premiums or through state subsidies.View Source
  • Removing unfair tax burdens, like the $60 billion annual tax imposed by the ACA, will lower premiums.View Source
  • Research shows that state regulations on health insurance programs increase insurance premiums.View Source
  • Government mandated coverage for unnecessary procedures also contributes to the increased cost of health care.View Source
  • Burdensome taxes on innovators in the medical field, like the $20 billion tax on medical device manufacturers imposed by the ACA, discouraging medical device innovation and drives up costs.View Source

Despite claims the Affordable Care Act would curb health care costs, prices went up double digits each year. In 2014, rates jumped 41%.

  • Health care insurance rates under the Affordable Care Act, or Obamacare, went up double digits each year. Research by the Manhattan Institute shows that the ACA was responsible for a 41% rate increase on average across states between 2013 and 2014. In 2017, popular plans sold on online health exchanges saw a 25% average rate increase.View Source
  • WATCH: Scholar Peter Van Dorn on health care reform.View Source
  • Related reading: “Reviving America: How Repealing Obamacare, Replacing the Tax Code and Reforming The Fed will Restore Hope and Prosperity” – Steve Forbes, Elizabeth AmesView Source

Taxes roll downhill, so imposing more taxes on health insurers—like Obamacare’s $60 billion tax—means higher costs for all of us.

  • Effective January 2014, the Affordable Care Act placed a $60 billion annual tax on the insurance industry.View Source
  • Insurers pass increased taxes on to the consumer in the form of higher premiums or through state subsidies.View Source
  • WATCH: Scholar Peter Van Dorn on health care reform.View Source
  • Related reading: “Freedom Manifesto: Why Free Markets Are Moral and Big Government Isn't” – Steve Forbes, Elizabeth AmesView Source

The more regulations and restrictions the government imposes on health insurers, the more costly our insurance. 

  • Research shows that state regulations on health insurance programs increase insurance premiums.View Source
  • States that removed Certificate of Need regulations for hospitals, outpatient clinics, and long-term care facilities reduced the average cost of patient care by 4% compared to those who have those regulations in place.View Source
  • The federal government requires certain medical procedures despite a lack of evidence for their effectiveness.View Source
  • These unnecessary procedures contribute to the increased cost of care.View Source
  • WATCH: Scholar Peter Van Dorn on health care reform.View Source
  • Related reading: “The Road to Prosperity: How to Grow Our Economy and Revive the American Dream” – Patrick Toomey, Lawrence KudlowView Source

Obamacare placed a $20 billion tax burden on medical device manufacturers, discouraging innovation and driving up costs. 

  • The cost of bringing a drug to market has doubled in the last ten years and now exceeds $2.5 billion. This is a barrier to entry in the industry and punishes drug innovators.View Source
  • Research and development on new drugs can cost between $4 - $11 billion.View Source
  • The Affordable Care Act places a $20 billion tax on medical device manufacturers. This punishes medical device innovation.View Source
  • WATCH: Scholar Peter Van Dorn on health care reform.View Source
  • Related reading: “Innovation Breakdown: How the FDA and Wall Street Cripple Medical Advances” – Joseph GulfoView Source

What’s the solution to the ever-rising costs of health insurance? The free market. We need to encourage more competition among insurers.

  • If we want to lower costs in the health care field, we must encourage competition among insurers, in part by limiting the tax burden. High taxation in the insurance industry has discouraged participation and forced insurers to pass the burden onto customers and taxpayers.View Source
  • Another important pro-free market step is to eliminate unnecessarily burdensome government regulations, which have been proven to drive up insurance premiums.View Source
  • Government mandated coverage for unnecessary procedures also contributes to the increased cost of health care.View Source
  • Finally, we must encourage innovation in the medical field; for example, by eliminating the $20 billion tax on medical device manufacturers imposed by the ACA, which discourages medical device innovation and drives up costs.View Source

Healthcare costs are skyrocketing. Since the Affordable Care Act passed in 2010 health care costs have gone up by double digits each year.

The health care bill did get more people insured and helped with issues like preexisting conditions, but the problem with the healthcare law isn't what it tried to do, it's what it failed to do: reduce costs. The solutions to the cost problem is with the free market and competition. Here are just three ideas that could make a huge difference.

Number 1: We can roll back the tax burden on insurance companies. The ACA added a $60 billion tax on health insurers, which made them have to charge more to consumers to cover their costs. Taxes roll downhill so a tax on insurers means higher costs for all of us.

Number 2: We can lower the regulations on health plans. The ACA has a lot of requirements that force insurance plans to cover an incredibly big list of benefits. If you want a bare-bones insurance plan that simply covers catastrophic events like a car accident or cancer you currently can't get one. By boosting the benefits of every plan it restricts competition and drives up prices by forcing smaller health insurers out of the marketplace. Low-cost catastrophic plans that are normally purchased by younger, healthier people are no longer available because of the ACA requirements.

Introducing as many health insurers to the marketplace as possible can drive down prices by encouraging businesses to compete to cut costs. The ACA did the exact opposite: Less competition and higher prices.

Number 3: Encourage medical innovation. The cost to bring a new drug to market already exceeds two and half billion dollars. And the ACA places an additional twenty-two billion dollar tax burden on innovator drug companies, the same businesses that produce lifesaving medications and cures for those in need. Punishing drug producers forces them to charge even higher prices to make up for the lost money in research, development, and taxes.

If we encourage, not punish drug makers it will lead to more breakthroughs and lower costs--a win, win for all of us.

As healthcare costs skyrocket, don't forget that the free market is our best chance to rein them in.

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