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Affordable Care Act, Economy, Government, Government Programs, Health Care, Health Care Reform, Health Disparities, Health Insurance, Health Reform, Healthcare, Media, Media Bias, Obama, Obamacare, Politics, Public Health, Public Policy, Social Justice, Society, Uncategorized, Women's Health

New Study Debunks Hype About Premium Increases Under The Affordable Care Act


There has been no shortage of hyped-up reports — and anecdotal predictions — of skyrocketing premiums in the coming year supposedly due to the Patient Protection and Affordable Care Act.

But researchers from the Robert Wood Johnson Foundation on Monday argued those fears remain largely unfounded.

In a new analysis, researchers from from The Robert Wood Johnson Foundation and the Urban Institute put some of the loudest hysteria to rest, finding that that “premium increases will be moderate (in line with underlying cost growth) rather than growing by double-digits.”

Researchers scrutinized premium data for eight states. In each instance, they concluded that premiums were lower than comparable products that were available prior to establishment of the exchanges. In Denver, for example, premiums in a small-group plan available before the launch of the exchanges averaged $440.50 per month. On the exchange, the average monthly premium for the silver plan (designed to cover 70% of medical costs) was roughly $220 per month for a 27-year-old and $375 for a 50-year-old. Similarly, in Fairfax, VA (near DC), the average pre-ACA premium for a small group plan was $449 per month, but on the exchange the price for a silver plan ranges from just $213-$225/month for a 27-year-old and $362-$383 for a 50-year-old.

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Premium costs for Silver plans are lower than pre-ACA averages in major cities across the country.

John Holahan, a fellow at the Urban Institute’s Health Policy Center and one of the report’s authors, sees that as evidence that the markets spurred competition and insurers felt pressure to keep prices low to attract a sufficient customer base. “It doesn’t seem to have worked as well in some rural markets where there isn’t as much competition and you don’t have a lot of leverage over providers,” Holahan said.

The report also determined that similar factors should keep rates from skyrocketing in 2015. There’s already substantial evidence that more insurers will compete on the exchanges in 2015. Four additional carriers have submitted proposed rates in Washington state and three not-for-profit co-op insurers are expanding operations into neighboring states. UnitedHealthcare, the country’s largest insurer, has indicated that it intends to compete more aggressively in 2015.

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Despite regional variation in prices, premiums were ‘surprisingly’ low across the nation. These trends are expected to continue in 2015.

In addition, it’s anticipated that the risk pools for the exchanges will become more balanced as they attract additional customers. The Congressional Budget Office projects that enrollment in commercial plans through the government-run marketplaces will expand to 15 million individuals next year, up from 8 million this year. On average, Holahan says the market forces that created lower-than-expected premiums in 2014, “should be even stronger in 2015 with increased enrollment and a more stable risk pool.”

Think Progress outlined the four primary reasons why researcher’s don’t expect significant premium hikes:

1. “The underlying rate of growth in health care costs remained slow through 2012.” Lower than expected health care spending means that premiums — which traditionally keep up with underlining health care spending — could be lower. Even though preliminary evidence suggests that spending increased in the first quarter of 2014 from all-time-lows, health care prices are still continuing to grow at low rates.

2. “Enrollment in Marketplace plans should be substantially higher in 2015 than 2014.” The Congressional Budget Office anticipates that 7 million people will sign up for health care coverage in 2015 and experts predict that with all of the early website problems fixed, the 2015 open enrollment process will prove smoother. Health insurers also reported a rush of younger enrollees in the final days of the first open enrollment period and expect that since sicker enrollees signed up in the early months of open enrollment, healthier than average beneficiaries will join in 2015.

3. “Cost sharing in the silver tier, the plans most often selected, are high enough to dampen utilization.” Economists have long found that higher cost sharing and narrower networks of doctors and hospitals could keep premiums lower and decrease unnecessary health care spending.

4. “Increasing size and attractiveness of the nongroup markets could intensify the amount of competition from insurers.” The marketplaces appear to be attracting greater insurer participation for 2015. “In Washington state, four insurers plan to sell for the first time on the exchange next year, including UnitedHealth. In Virginia, a local health plan owned by a hospital and physicians in Lynchburg has proposed to join Aetna Inc., Kaiser Permanente and WellPoint Inc. in 2015. And in Indiana, the health exchange’s offerings may double to eight companies,” Bloomberg reported.

States where insurers have already submitted proposed 2015 premium rates appear to substantiate the new findings. According to Bloomberg, insurers in Washington state posted an average proposed rate increase of 8.25 percent, the lowest increase in seven years. Researchers also said that factors such as more young people purchasing plans through the exchanges and the slow growth rate overall in health care costs also will help hold down premiums.

“Based on plan participation in the marketplaces, we expect insurance companies to be eager to compete with health insurance plans in their markets to attract more customers,” said Andy Hyman, who works on coverage issues at the Robert Wood Johnson Foundation.

“This high level of competition should keep premium increases in most markets no higher than we have seen in previous years, with marketplace plans remaining an affordable option for high-quality health coverage.”

It’s important to point out that health insurance premiums go up every yearso an increase in rates would be expected regardless of the effects of the Affordable Care Act. In fact, a recent analysis from the Kaiser Family Foundation found that premium prices for a single employee have risen nearly 270 percent since 1999; the same is true for premiums on the individual market, which went up 32 percent between 2005 and 2012.

Premium prices have been increasing each year since long before President Obama even took office, but opponents of the ACA are blaming the health care law for the long-standing trend.

Premium prices have been increasing each year since long before President Obama even took office, but opponents of the ACA are blaming the health care law for the long-standing trend.

However, opponents of the health care law usually don’t acknowledge this trend — instead, they incorrectly blame the Affordable Care Act for raising the cost of health insurance. When Health and Human Services Director Kathleen Sebelius said that premium rates will go up next year, as they do every year, conservatives were quick to attribute the increase to ‘Obamacare,’ displaying either complete ignorance of the health care industry or complete disregard for being honest (I have an opinion about which one it is, but I’ll let you come to your own conclusion on that one…!). “Sebelius admits Obamacare will raise health insurance premiums in 2015,” one article title claimed. Even the supposed ‘experts’ at the Wall Street Journal implied that any hike in premiums is a sign that the Affordable Care Act is failing to live up to its promise — even though no one ever thought the health care law would, within less then two years, reverse a decades-long trend in rising premiums. House Speaker John Boehner (R-Ohio) tweeted out the WSJ article, apparently shocked that health insurance premiums will continue to go up — as they have been for decades:

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What Boehner failed to mention is the fact that health insurance plans in the employee-based market have been rising at a slower-than-usual pace since the initial provisions of the health care law were put into place. He also omitted that piece about the Affordable Care Act contributing to the slowest rate of health care spending growth in our nation’s history

Overall, the news about the Affordable Care Act has been extremely positive in recent months. By the time open enrollment ended, over 8 million people had signed up for new insurance plans under the Affordable Care Act, exceeding even the most optimistic goals. Since then, several reports have delivered more good news for the Obama administration. Just a week after sign-ups ended, the ACA had already reduced the number of uninsured Americans to the lowest it’s been in 5 years — and a month later, the uninsured rate had plunged even more.

In mid-April, the Congressional Budget Office (CBO) released updated estimates on the health care budget, and their findings showed that the ACA is actually going to be significantly cheaper to implement than we initially thought. In their analysis, the CBO also found that the price of premiums for plans sold through the exchanges may be as much as 50 percent lower than original estimates. That finding is reflected in today’s report from the Robert Wood Johnson Foundation.

Moreover, the health care law is also helping struggling hospitals to stay open, and it’s predicted to raise the incomes of the poorest Americans by at least five percent — and another recent study found that the Affordable Care Act will also boost young adults’ incomes.

While the positive economic outlook is certainly important, the most significant benefit of the new health care law is the major impact on the wellbeing of Americans. According to a recent Harvard University study, the Affordable Care Act will prevent a staggering 31, 325 premature deaths in the next three years alone. Meanwhile, another Harvard study found that an estimated 17,000 people will die directly as a result of Republicans’ refusal to expand Medicaid in their states.

As more and more positive findings about the Affordable Care Act come to light, it’s become increasingly clear to most Americans that the GOP’s anti-Obamacare campaign is based on nothing more than unfounded scare tactics. The only one of the GOP’s apocalyptic predictions that has come true is the one about the death panels  — except, as it turns out, Republicans themselves are the real death panel.


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