The Pressures of Rising Costs on Employer Provided Health Care

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Thank you Chairman Roe, Ranking member Andrews, and members of the Subcommittee for the opportunity to speak this morning on the pressures of rising costs on employer-provided health care.

I am speaking today as a health policy researcher, a resident fellow at the American Enterprise Institute and co-author of the forthcoming book, "Why ObamaCare Is Wrong for America (to be published later this month). I also will draw upon previous experience as a senior health economist at the Joint Economic Committee, member of the National Advisory Council for the Agency for Healthcare Research and Quality, and health policy researcher at several other Washington-based think tanks.

The subject of this hearing is not a new one, although the economic and policy context in which we examine it has changed and will continue to do so in the years and decades ahead. The two most significant factors are the recent deep recession--from which both the overall economy and its health sector are slowly recovering-and the passage and early implementation of the Patient Protection and Affordable Care Act (referred to hereafter as "ACA")-from which they may not, without a substantial change in direction.

Roughly 170 million Americans received private health insurance through the workplace in 2009, and the vast majority of those workers and their families, despite periodic complaints, value it very much. However, our largely employer-based system of private health coverage does not work well for everyone-most notably those workers who lose their jobs. Or who cannot find either new or initial work. Or who cannot afford their share of expensive and rising premiums. Or who need a better balance between lagging wages and rising health benefits costs. Or whose employer simply cannot afford to offer insurance. Millions of people need better options to get more stable and affordable health insurance.

As director of AEI's "Beyond 'Repeal and Replace:' Ideas for Real Health Reform" project, I would be happy to discuss in greater depth a number of better solutions to the continuing chronic conditions of high costs, inconsistent quality, gaps in access, and misaligned incentives throughout our health care economy. However, the primary focus of my testimony today is, first, to place employer health care cost challenges and assertions about them in perspective. I then will examine the likely effects of the ACA on the future "health" of employer-sponsored health insurance, and very briefly conclude with some suggested policy alternatives.

In brief, we should be more concerned about what is likely to unfold as we approach 2014 and the immediate years afterward than the most recent headlines of the limited-dosage effects of the ACA's initial year of implementation. It has not provided much short-term help, but still threatens to do more harm later. A number of blame-shifting assertions, statistical mirages, overstatements, and simplistic pet theories should not distract us from the more complex and daunting task of both rethinking the path that the previous Congress took in the ACA and pursuing more robust and realistic routes to sustainable, higher-value health care.

Thomas P. Miller is a resident fellow at AEI.

 

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