Report: ACA’s Effect on Insurance Premiums Varies by Income Level
The effect of the Affordable Care Act on Californian'sÂ individual health plan premiums will vary significantly according to members' income level, according to a new report, the New York Times reports (Pear, New York Times, 3/28).
The report was developed by consulting firm MillimanÂ and commissioned byÂ Covered California, the state health insurance exchange (Sanders, "Capitol Alert," Sacramento Bee, 3/28).
The report found that middle-income residents could see individual health plan premiums increase by an average of 30% and total health care costs increase by an average of 20% under the ACA.
However, families earning less than $60,000 annually could save up to 84% on premiums and 76% on total care costs with the help of federal subsidies, according to the report.
Researchers found that residents with annual incomes between 250% and 400% of the federal poverty level who currently are enrolled in individual plans will pay an average of 47% less when they have access to subsidies under the ACA (Terhune, Los Angeles Times, 3/28).
In addition, the report estimated that premium rates for individual health plans in California would increase by an average of 9% in 2014 without changes under the ACA (AP/Modern Healthcare, 3/29).
The report attributed overall cost increases to guaranteed coverage for sicker applicants under the ACA (Los Angeles Times, 3/28).
Robert Cosway -- an actuary at Milliman -- said that under the ACA, "[h]ealth insurance will become relatively less expensive for people with chronic conditions and relatively more expensive for healthier people." He added that some healthier individuals might drop their health insurance coverage because of increasing premiums (New York Times, 3/28). Â
Patrick Johnston -- president of the California Association of Health Plans -- said, "These richer benefits, more predictable coverage and subsidies come at a cost," adding, "All these expansions add to the already increasing cost of care" (Los Angeles Times, 3/28).However, Peter Lee -- executive director of Covered California -- said, "There are 5.3 million Californians who will qualify to purchase insurance through the exchange," adding, "Insights gained from this research confirm that most people will experience a positive impact" (New York Times, 3/28). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.