White House Defends ACA Following Sebelius’ Remarks on Cost Hikes
On Wednesday, the Obama administration reiterated that the Affordable Care Act is helping to reduce consumers' health care costs after HHS Secretary Kathleen Sebelius stated on Tuesday that some newly insured U.S. residents could experience higher health costs in the coming years, the first time an administration official has acknowledged premiums could increase, The Hill's "Healthwatch" reports (Sink, "Healthwatch," The Hill, 3/27).
Comments on ACA's Effect on Premiums
During a White House press briefing Tuesday, Sebelius said that some ACA provisions could cause health insurance premiums to rise in the individual market, particularly for men and younger individuals (California Healthline, 3/27). She added, "These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market" (Radnofsky, Wall Street Journal, 3/26).
Sebelius noted that right now, "[e]verything is speculation" and definitive data on costs would not be available until later this year when health plans become fully authorized to sell coverage through the ACA's health insurance exchanges (California Healthline, 3/27).
On Wednesday, White House Deputy Press Secretary Josh Earnest told reporters, "I would actually point to the results that we're already seeing from the [ACA], which is a savings of $2.1 billion, and the analysis from the [Congressional Budget Office] that actually says in the future, we're gonna see rates that are lower for higher benefits."
According to "Healthwatch," Earnest also evaded a question on whether insurance premiums would increase under the ACA for some consumers, which was the conclusion of a report released Tuesday by the Society of Actuaries ("Healthwatch," The Hill, 3/27).
The report said that health insurers likely will have to pay an average of 32% more for medical claims under the ACA, which potentially could result in higher insurance premiums for some consumers. For the report, researchers analyzed a model of the effects of the ACA's insurance expansion in the individual market in each state.
The report found that while medical claims costs per individual policyholder in some states would decline, a large majority of states would see double-digit increases in claims costs. Its authors explained that the costs would increase largely because an ACA provision scheduled to take effect on Jan. 1, 2014 prohibits insurers from denying coverage to individuals with pre-existing medical conditions, which could potentially add more costly, sicker individuals to the insurance pool (California Healthline, 3/27).
Earnest dismissed the report, saying that "it's not particularly surprising to me that an insurance company would conduct a study that was critical of a piece of legislation that was promising to hold them accountable for their actions" ("Healthwatch," The Hill, 3/27).
Health Insurers Question Premium Affordability Under ACA
Meanwhile, health insurers are becoming more concerned about the affordability of health coverage, as they prepare to submit 2014 premium rates to state regulators next month for plans that will be sold through the health insurance exchanges, Modern Healthcare reports.
In a recent interview with Modern Healthcare, America's Health Insurance Plans CEO Karen Ignagni said some of the ACA's provisions -- including a new insurance premium tax, mandated essential health benefits and a narrower age-band ratio -- would drive up the cost of coverage. In turn, many individuals might be more inclined to pay the penalty for failing to obtain coverage than to pay higher insurance premiums.
Experts Predict Premium Rise in Small-Group Market
Although the Society of Actuaries report focused only on the individual market, some experts predict that the possible premium increases will have a similar effect on the small-group market, Modern Healthcare reports.
Katie Mahoney -- executive director of health policy at the U.S. Chamber of Commerce -- said the small-group market is "likely to see the same increases ... because the new requirements (for individual plans offered on exchanges) also apply to the small group market."
Bob Graboyes -- a senior fellow for health and economics at the National Federation of Independent Businesses -- said some small businesses might opt to pay a penalty rather than continue to offer coverage if the cost of medical claims increases beyond what the actuaries' report predicts (Block, Modern Healthcare, 3/27).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.