I
have a question; If physicians are not being paid (reimbursed at higher rates
for services)…Then who gets the extra money being forced into the system?
Study
estimates Obamacare could raise individual claim costs 32 percent
Actuaries groups
offers sobering look at the rising costs for individual insurance coverage
plans under Obama health law
UPDATED 22:58 PM EDT, March 26, 2013 | BY John Solomon
One of the nation's premier experts in
numbers has a tough diagnosis 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.
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.
The report did not make similar
estimates for employer plans, the mainstay for workers and their families.
That's because the primary impact of Obama's law is on people who don't have
coverage through their jobs.
The report also predicts the law will
reduce the number of Americans without health insurance from 16.6 percent to
between as low as 6.6 percent after three years.
The Associated Press has a good summary
of the debate the report generated. Here's what AP had to say:
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."
A prominent national expert, recently
retired Medicare chief actuary Rick Foster, said the report does "a
credible job" of estimating potential enrollment and costs under the law,
"without trying to tilt the answers in any particular direction."
"Having said that," Foster
added, "actuaries tend to be financially conservative, so the various
assumptions might be more inclined to consider what might go wrong than to
anticipate that everything will work beautifully." Actuaries use
statistics and economic theory to make long-range cost projections for
insurance and pension programs sponsored by businesses and government. The
society is headquartered near Chicago.
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."
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.
Bohn said the study overall presents a
mixed picture.
Millions of now-uninsured people will
be covered as the market for directly purchased insurance more than doubles
with the help of government subsidies. The study found that market will grow to
more than 25 million people. But costs will rise because spending on sicker
people and other high-cost groups will overwhelm an influx of younger,
healthier people into the program.
Some of the higher-cost cases will come
from existing state high-risk insurance pools. Those people will now be able to
get coverage in the individual insurance market, since insurance companies will
no longer be able to turn them down. Other people will end up buying their own
plans because their employers cancel coverage. While some of these individuals
might save money for themselves, they will end up raising costs for others.
Part the reason for the wide
disparities in the study is that states have different populations and
insurance rules. In the relatively small number of states where insurers were
already restricted from charging higher rates to older, sicker people, the cost
impact is less.
"States are starting from
different starting points, and they are all getting closer to one
another," said Bohn.
The study also did not model the likely
patchwork results from some states accepting the law's Medicaid expansion while
others reject it. It presented estimates for two hypothetical scenarios in
which all states either accept or reject the expansion.
Larry Levitt, an insurance expert with
the nonpartisan Kaiser Family Foundation, reviewed the report and said the
actuaries need to answer more questions.
"I'd generally characterize it as
providing useful background information, but I don't think it's complete enough
to be treated as a projection," Levitt said. The conclusion that employers
with sicker workers would drop coverage is "speculative," he said.
Another caveat: The Society of
Actuaries contracted Optum, a subsidiary of UnitedHealth Group, to do the
number-crunching that drives the report. United also owns the nation's largest
health insurance company. Bohn said the study reflects the professional
conclusions of the society, not Optum or its parent company.
___
AP White House Correspondent Julie Pace
contributed to this report.
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