The cost of health care is high. There are several news reports and analyses being released by various organizations about the cost of the healthcare as a result of the ACA. The American Action Forum analyzed a report conducted by the Manhattan Institute, which has graded the ACA based on cost containment and premium increases. According to AAF, “The law’s impending tax increases have received considerably less attention, but, as shown in the graph below, are going to be significant over the next ten years, reaching nearly 200 billion in revenue by 2022.”

AAF’s analysis predicting a tax increase of approximately $200 billion over the next ten  years seems dramatic. Recently, there have been several news reports that have started to examined the costs of the ACA According to Forbes, there are facors that play a role in creating the rate shock:

1.) The ACA, unfortunately, targets younger people to purchase a healthcare plan in order to “subsidize premiums for those in their early 60s, using a provision called ‘community rating.’”

•  AAF came to a similar conclusion in their research of premium sticker shock last month. AAF’s report finds that young and healthy individuals will be burdened with health care premiums. The premium costs of older and sicker individuals, however, will see an average decrease of just under 25 percent.

2.) The ACA will require the insurance plans to increase “minimum actuarial value.”

• The ACA establishes four levels of health coverage from the standpoint of actuarial value. Actuarial value represents the share of expenses that a plan must cover for the enrollees. As health plans increase in their actuarial value, their coverage also increases along with a greater share of enrollees’ health expenses.

3.) There is a “guaranteed issue” which covers pre-existing conditions. This was a key provision in passing the ACA.

• The Heritage Foundation reports that in 2010, the Obama administration estimated a total of 375,000 people will enroll in the pre-existing conditions insurance plan (PCIP) compared to the actual number of 107,139 enrolled as of January 2013. The budget of PCIP for a time frame of 2010-2014 is $5 billion and “the PCIP is running out of money.” The Heritage Foundation finds that “the issue was overestimated and the costs were underestimated.” These findings are alarming because it projects an increase in overall spending in the already struggling economy.

4.) The ACA gives HHS the authority to mandate insurance plans to provide “extra benefits” that those consumers would not have chosen in the first place. This will lead to an increase of cost in individual’s health plans.

• Care First Blue Cross in Virginia will charge $1978/month under guaranteed issue compared to the $333/month without guaranteed issue. Even with the difference of $1645/month, those with pre-existing conditions may pay the price. However, healthy individuals and families could see an increase in their premiums of $20,000.

5.) There are taxes on pharmaceuticals as well as on medical devices, which will be a hidden factor increasing premiums.

A health care reform is necessary for this country. There are several studies and analyses illustrating that the ACA is not the answer to our current, problematic health care system. The government should repeal the health insurance tax because it is becoming a financial burden on the already staggering economy. These increases in premiums and imposing new taxes will hurt the middle class the most. It is straining the taxpayers to fund the ACA since the current, depressing economy cannot afford to do so on its own.