1. Running header: THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US
HEALTH INSURANCE MARKET
i
The Cost & Impact of Massive Complexity in the US Health Insurance Market
Russell R. Kuhn
June 22, 2015

2. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
ii
Abstract
Healthcare and health insurance in the United States (US) today is already incredibly complex,
expensive and all evidence points to forthcoming premiums that are even higher. In addition to
the current complexity, the Affordable Care Act (ACA), also known as Obamacare, has been
legally challenged [for the second time] and the Supreme Court of the United States (SCOTUS),
this month, is going to issue a judgment about the legality of a critical aspect of ACA; the
subsidies, or federal money component of the law. The subsidies, which may be declared illegal,
are used for offsetting the cost of the ACA health insurance policies by almost 8 million people
across 34 states (Young, 2015). The confusion, however, is not going to be limited just to the
almost 8 million directly affected, but rather will most likely have a cascading effect that will
impact nearly every American searching for health insurance this and several years into the
future. Therefore, this white paper reviews (a) US health insurance complexity, (b) the current
US Supreme Court challenge to the ACA, and (c) what all of this means for US consumers of
health insurance.

3. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
1
Healthcare and Health Insurance Today in the United States
Healthcare today represents a complex, expensive, confusing challenge for millions of
Americans. This paper reviews the following factors of the US healthcare and health insurance
market today followed by a summary of the impact these factors have on US health insurance
consumers:
1.! Complexity and cost of healthcare and insurance today in the United States
2.! The positive and negative impact of ACA
3.! The current legal challenge and possible impact to the ACA and healthcare insurance
consumers
Complexity and Cost of Healthcare and Insurance Today in the United States
As most Americans probably know from personal experience, the healthcare system in
the US is already the most complex and expensive health system in the developed world today
(Schoen, Osborn, Squires, & Doty, November 13, 2013). According to Jim Kahn (2015), “the
U.S. system of paying for health care is tremendously complex and inefficient: a multitude of
insurers, thousands of insurance plans, innumerable medical bills, countless incorrect and denied
claims” (para. 1).
According to Schoen et al. (November 13, 2013):
•! Almost 40% of Americans went without appropriate care because of the
[increasing] costs
•! Nearly 25% of all Americans have trouble paying their medical bills
•! Almost 33% of all Americans have spent significant time dealing with insurance
paperwork and disputes
According to Schoen et al. (November 13, 2013), all of these statistics are all due to, “a complex,

4. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
2
fragmented insurance system” (Schoen et al., November 13, 2013, para. 6).
The Impact of ACA, Positive and Negative
The Affordable Care Act, known both as the ACA and Obamacare was passed in 2010
with the intention of providing more affordable healthcare to more people in the US, esepcially
those people that, at the time, did not have healthcare coverage or insurance of any kind. ACA
has in fact provided health insurance to millions of people that previously did not have coverage.
But, even with the best of intentions, there have been some unintentional negative factors created
by the ACA. Those negative factors are: even more complexity and significantly increased and
regularly changing regulations, sigificantly increasing healthcare expenses to households, and a
decision process and timeline that leaves many American households confused and dazed about
their healthcare insurance options due to the timeline for final subsidies and premium approvals [
as noted and referenced below].
In fact, as this paper is being written, significantly increased health insurance premiums
for 2016 are being discussed across the country; the premium increases are very large, double
digit, premium increases being requested nation wide. According to several reports, requested
premium increases range all the way up to a whopping 50% in some states (Radnofsky &
Armour, 2015; Snowbeck, 2015). A very few specific examples are:
•! Illinois
o! 42% increase requested by Time Insurance Company (Eggert, 2015)
o! 38% increase requested by Blue Cross (Eggert, 2015; Venteicher & Sachdev,
2015)
•! Pennsylvania

5. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
3
o! 30% increase requested by Highmark Health Insurance Company
(EmploymentLawAcademy.com, 2015; FoxNews.com, 2015; Radnofsky & Armour,
2015)
•! North Carolina
o! 26% increase by Blue Cross and Blue Shield (FoxNews.com, 2015)
In addition to the pending premium increases, two additional related factors make it very
challenging for anyone to make informed, high quality decisions about their health insurance
needs and options:
•! Timing of final premiums decision - consumers won’t learn what the insurance
rates are until October for the Open enrollment period that begins November 1st
(EmploymentLawAcademy.com, 2015).
•! Subsidies information - no consumer knows until tax time of the following year
what, if anything, they will be getting in subsidies under the ACA (Blake, 2015,
para. 1).
•! Sheer volume of options and ongoing changes – as mentioned previously, the
sheer number of options each consumer has is daunting. Combine that with the
fact that there are numerous regulations change every year, which leads to even
more options being created and added to the already complex mix for consumer
consideration.
The Current Legal Challenge and Possible Impact to the ACA and Healthcare Consumers
With all of the complex and confusing aspects that already exist for American healthcare
consumers today, there is an additional complication that most people are not aware of and that
is the legal case of King v. Burwell which is going to be decided this month, June of 2015. King

6. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
4
v. Burwell challenges the legality of Section 1321 of the Patient Protection and Affordable Care
Act (ACA). Specifically, the case challenges the tax-credit subsidies paid to any person residing
in a state that uses the federal health care exchange versus a state operated exchange (Barnes,
2015; Fletcher, 2015; SCOTUSblog, 2015).
There are two overarching types of impact this court case ruling is going to have on
Americans. The first is a very large and important impact to the almost eight million people that
will be directly impacted by the possible loss of their federal subsidies if the Supreme Court rules
against the ACA. On average, these subsidies reduce the healthcare insurance premiums of
qualified people from $382 down to $110 per month (Young, 2015). If the Supreme Court rules
against the ACA, these subsidies become illegal and have to be stopped. If that happens, that is
an effective increase in policy expense of about 347% for almost eight million Americans. The
other impact will be an indirect impact on the entire health insurance market place itself if,
according to Supreme Court Justice Scalia, these, “disastrous consequences occur” (Denniston,
2015).
What Happens After the Supreme Court Rules – For or Against the ACA?
Unfortunately, no one knows how the Supreme Court is going to rule this month. If the
Supreme Court rules in favor of the ACA, then the subsidies will continue to be provided and the
American health insurance consumers will only have to deal with the current, ongoing situation
of increasing cost and complexity of healthcare coverage.
But, if the Supreme Court rules against the ACA, no one is exactly sure what is going to
happen; that includes all news sources, political pundits, as well as this author’s personal
political contacts in Washington D.C. and across the country. There are numerous options
possible; from the Supreme Court ruling against the ACA, but staying or delaying the official

7. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
5
judgment, to give time to the government to fix the issue (Denniston, 2015). The Supreme Court
could also invoke what is known as the Chevron defense which would allow the Supreme Court
to put the decision back in the hands of the IRS (obamacarefacts.com, 2015); or the Supreme
Court could simply rule against the ACA and take no additional steps which would result in the
subsidies that empower millions of people to obtain health insurance illegal.
Summary and Conclusion
Summary
So what does all of this really mean to Americans, as healthcare consumers? One way to
summarize the situation is to share the results of a study recently completed by Money
Magazine. The study found in today’s complex and expensive health insurance environment
[without even the additional impact of the current Supreme Court case], 80% of healthcare
insurance selections made by individuals and families - were bad decisions (Moeller, 2015). The
people in the study made the best decisions they could with their own understanding but their
choices led to results such as:
•! Wasted money of 40% or more of the person’s annual premium expenses
•! Opting for low deductible plans that led to actually spending more money due to
out of pocket expenses not exceeding the additional premiums over the higher
deductible plans
What is possibly the most discouraging item in the study is that when researchers
informed the people about the impact of their choices, it had almost no effect because more than
70% of the people simply didn’t understand insurance well enough to make good decisions on
their own (Moeller, 2015).

8. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
6
The study by Moeller is further supported by Legge (2015) who stated, “many are still
overwhelmed by the complexity of the system and the length of time it takes to apply” (para. 7).
Legge went on to state that all health insurance, even through the ACA, is private health
insurance and is therefore comprised of the same complex set of variables and choices to arrive
at the best coverage for each person or family. This finally leads to…
Conclusion
Because healthcare has become of the second largest expenditures for US households
today (Conover, 2011; Statistics, 2014), “Improving insurance literacy is crucial” for Americans
to understand how to make the best choices possible when it comes to their healthcare and health
insurance (Moeller, 2015, para. 11). The question is, can the average American healthcare
consumer become knowledgeable enough in an area so complex combined with significant
changes every year? The fact of the matter is most people probably cannot become and remain
knowledgeable enough to make fully informed, high quality decisions for their health insurance
needs completely on their own.
Most Americans today, seek professional advice from either a certified tax planner or
certified public accountant to assist with both their tax planning and annual tax filings. And
most Americans would never dream of actually going to court for a legal case without the
professional [and necessary] counsel from an attorney. Well, the US health insurance market has
become every bit as complex and intricate as both the US tax code and the US legal code and it
is the conclusion of this author that most Americans need to seek the counsel of a professional
advisor in the area of health insurance as well.
It may be a sad fact, but a fact, none the less: It has become critical for Americans and
their families to be represented and guided by a subject matter expert in the realm of health

9. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
7
insurance. Someone that cares enough to learn the real healthcare needs, wants, and financial
means of each consumer and can balance those against all of the myriad of policy options and
providers to provide the best value coverage available.

10. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
8
References
Barnes, Robert. (2015). Supreme Court justices split in key challenge to Obamacare subsidies.
The Washington Post. Retrieved from Washington Post website:
http://www.washingtonpost.com/politics/courts_law/obamacare-back-before-high-court-
today/2015/03/03/6dff31a4-c1ec-11e4-9271-610273846239_story.html
Blake, Brian. (2015). No, Obamacare's Complexity is Not a Good Thing. The Weekly Standard.
Retrieved from Theweeklystandard.com website: No, Obamacare's Complexity is Not a
Good Thing
Conover, Christopher J. (2011). The family healthcare budget squeeze. American Enterprise
Institute. Retrieved from American Enterprise Institute website:
http://www.aei.org/publication/the-family-healthcare-budget-squeeze/
Denniston, Lyle. (2015). Special Feature: Affordable Care Act ‘Exchange’ Challenges,
Argument analysis: Setting up the private debate on the ACA. Retrieved from
http://www.scotusblog.com/2015/03/argument-analysis-setting-up-the-private-debate-on-
the-aca/
Eggert, David. (2015). Health Insurers in Illinois, Michigan Seeking Rate Hikes for 2016.
Insurance Journal. Retrieved from Insurance Journal website:
http://www.insurancejournal.com/news/midwest/2015/06/03/370406.htm
EmploymentLawAcademy.com. (2015). ObamaCare Premiums May Increase 30% in 2016.
Workerscompensation.com. Retrieved from Workerscompensation.com website:
http://www.workerscompensation.com/compnewsnetwork/news/21542-obamacare-
premiums-may-increase-30-in-2016.html

11. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
9
Fletcher, Holly. (2015). Experts preview ACA tax credit ruling showdown. The Tennessean.
Retrieved from The Tennessean website:
http://www.tennessean.com/story/money/industries/health-care/2015/05/31/experts-
preview-supreme-court-health-care-ruling-showdown/28267911/
FoxNews.com. (2015). Health insurers seek big premium hikes for ObamaCare plans in 2016.
Fox News.com. Retrieved from Fox News website:
http://www.foxnews.com/politics/2015/06/02/health-insurers-ask-for-big-premium-hikes-
for-obamacare-plans-in-2016/
Jim Kahn, MD, MPH. (2015). The financial sinkhole of health insurance complexity. MedPage
Today. Retrieved from KevinMD.com website:
http://www.kevinmd.com/blog/2015/02/financial-sinkhole-health-insurance-
complexity.html
Legge, Robert. (2015). Yes, health insurance really can be affordable. Star Exponent. Retrieved
from Starexponent.com website:
http://www.dailyprogress.com/starexponent/opinion/columnists/yes-health-insurance-
really-can-be-affordable/article_872c929e-0732-11e5-b638-039d0bbaf42c.html
Moeller, Philip. (2015). Why Too Many Health Insurance Choices Are Costing You Money.
Money. Retrieved from Money.com website: http://time.com/money/3894968/health-
insurance-choices/
obamacarefacts.com. (2015, March 4, 2015). Oral Arguments for King V. Burwell. ObamaCare
Facts. Retrieved June 3, 2015, from http://obamacarefacts.com/2015/03/04/oral-
argument-for-king-v-burwell/

12. THE COST & IMPACT OF MASSIVE COMPLEXITY IN THE US HEALTH INSURANCE
MARKET
10
Radnofsky, Louise, & Armour, Stephanie. (2015). More Health-Care Insurers Seek Big Premium
Increases. The Wall Street Journal. Retrieved from The Wall Street Journal website:
http://www.wsj.com/articles/more-health-care-insurers-seek-big-premium-increases-
1433206078
Schoen, Cathy, Osborn, Robin, Squires, David, & Doty, Michelle M. (November 13, 2013).
Access, Affordability, and Insurance Complexity Are Often Worse in the United States
Compared to 10 Other Countries. Health Affairs, 32(12), 2205-2215.
SCOTUSblog. (2015). King v. Burwell. Retrieved from http://www.scotusblog.com/case-
files/cases/king-v-burwell/
Snowbeck, Christopher. (2015). Some Minnesota health insurers seek large premium hikes. Star
Tribune. Retrieved from Star Tribune website: http://www.startribune.com/health-
insurers-seek-premium-hikes/306048821/
Statistics, Bureau of Labor. (2014). Consumer Expenditures - 2013. Economic News Release.
from http://www.bls.gov/news.release/cesan.nr0.htm
Venteicher, Wes, & Sachdev, Ameet. (2015). Some steep increases in health premiums expected
in Illinois in 2016. Chicago Tribune. Retrieved from The Chicago Tribune website:
http://www.chicagotribune.com/news/local/breaking/ct-obamacare-insurance-rates-
20150601-story.html
Young, Jeffrey (Producer). (2015, June 3, 2015). The Supreme Court Case That Could Gut
Obamacare, Explained In 2 Minutes. Politics. [Video] Retrieved from
http://www.huffingtonpost.com/2015/06/01/supreme-court-obamacare-
video_n_7424034.html