Remember, elections have consequences.
A recent study released by one of the nation’s premier insurance experts has some sobering news for President Barack Obama’s health care law. In a report that could prove a big political headache for the administration, the Society of Actuaries estimated Tuesday that insurers will have to pay out an average of 32 percent more for claims on individual health policies under the Affordable Care Act, a cost likely to be passed on to consumers.
The Washington Guardian reports that while some areas will see declines in medical claims costs, the report predicts the majority of states will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers rather than get coverage from employers.
By 2017, the estimated increase would be 62 percent for California, about 80 percent in Ohio and Wisconsin, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said.
On the plus side, the report found the law will cover more than 32 million currently uninsured Americans when fully phased in. And some states — including New York and Massachusetts — will see double-digit declines in costs for claims in the individual market.
Uncertainty over costs has been a major issue since the law passed three years ago, and remains so just months before a big push to cover the uninsured gets rolling Oct. 1. Middle-class households will be able to purchase subsidized private insurance in new marketplaces, while low-income people will be steered to Medicaid and other safety net programs. States are free to accept or reject a Medicaid expansion also offered under the law.
Obama has promised that the new law will bring costs down. That seems a stretch now. While the nation has been enjoying a lull in health care inflation the past few years, even some former administration advisers say a new round of cost-curbing legislation will be needed.
The AP summarizes the response from the White House:
The administration questions the design of the study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. The study also doesn’t take into account the potential price-cutting effect of competition in new state insurance markets that will go live on Oct. 1, administration officials said.
At a White House briefing on Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can’t be compared to the comprehensive coverage available under the law. “Some of these folks have very high catastrophic plans that don’t pay for anything unless you get hit by a bus,” she said. “They’re really mortgage protection, not health insurance.”
Kristi Bohn, an actuary who worked on the study, acknowledged it did not attempt to estimate the effect of subsidies, insurer competition and other factors that could mitigate cost increases. She said the goal was to look at the underlying cost of medical care.
“Claims cost is the most important driver of health care premiums,” she said.
“We don’t see ourselves as a political organization,” Bohn added. “We are trying to figure out what the situation at hand is.”
For more information, read the Washington Guardian’s article here.