Health Care Law’s Impact on Premiums
I wanted to pass along this article from today’s Hartford Courant about some of the premium increases being requested in Connecticut – many as a result of the health care reform law:
Anthem Blue Cross and Blue Shield in Connecticut, by far the largest insurer of Connecticut residents, said in a letter that it expects the federal health reform law to increase rates by as much as 22.9 percent for just a single provision — removing annual spending caps. The mandate to provide benefits to children regardless of pre-existing conditions will raise premiums by 4.8 percent, Anthem said in the letter. Mandated preventive care with no deductibles would raise rates by as much as 8.5 percent, Anthem said.
An Obama Administration was quoted in the article as saying that “outside groups have done estimates, including the Urban Institute and Mercer, and the credible estimates come in the 1 [percent] to 2 percent range.” However, in reality Mercer’s survey of employers found that the mandates taking effect this year alone would raise premiums by more than 2 percent on average – and small groups would face even greater premium impacts.
The article also makes a particularly salient point with respect to premium impacts: “Among all the plans, some already deliver the provisions required by health reform, while others do not.” In other words, some individuals choose affordable plans that provide the benefits they need without other benefits they do not want. These plans, and these individuals, will be most impacted by premium increases under the law – and the impact in these cases may be much greater than the 1-2 percent the Administration projects.
On a related note, below is a graph we’ve prepared highlighting rhetoric versus reality on premiums. The President promised during his campaign that his health care plan would “bring down premiums by $2,500 for the typical family.” However, the annual Kaiser Foundation survey of employer-provided insurance found that average family premiums totaled $12,860 in 2008, $13,375 in 2009, and $13,770 in 2010. In other words, while candidate Obama promised premiums would fall by $2,500 on average, premiums have risen by $1,090 during the Obama Administration. That difference is manifest in the graph below.
