Covering pre-existing conditions and â€˜essential benefitsâ€™ raising insurance plan costs
By Valerie Richardson – The Washington Times –
The Affordable Care Act was supposed to make health care more affordable, but a study of insurance policies before and after Obamacare shows that average premiums have skyrocketed, for some groups by as much as 78 percent.
Average insurance premiums in the sought-after 23-year-old demographic rose most dramatically, with men in that age group seeing an average 78.2 percent price increase before factoring in government subsidies, and women having their premiums rise 44.9 percent, according to a report by HealthPocket scheduled for release Wednesday.
The study, which was shared Tuesday with The Washington Times, examined average health insurance premiums before the implementation of Obamacare in 2013 and then afterward in 2014. The research focused on people of three ages â€” 23, 30 and 63 â€” using data for nonsmoking men and women with no spouses or children.
The premium increases for 30-year-olds were almost as high as for 23-year-olds â€” 73.4 percent for men and 35.1 percent for women â€” said the study, titled “Without Subsidies Women & Men, Old & Young Average Higher Monthly Premiums with Obamacare.”
“It’s very eye-opening in terms of the transformation occurring within the individual health insurance market,” said Kev Coleman, head of research and data at HealthPocket, a nonpartisan, independently managed subsidiary of Health Insurance Innovations in Sunnyvale, California.
“I was surprised in general to see the differences in terms of the average premiums in the pre-reform and post-reform markets,” Mr. Coleman said. “It was a higher amount than I had anticipated.”
The eye-popping increases among younger insurance buyers could be a problem for Obamacare’s long-term solvency given that young people need to enroll to offset the higher costs associated with older policyholders.
“Obviously they’re very important, and as much as they’re healthier, they tend to use health care less, so you want to try and have as many of those people enrolled as possible. And the cost for them went up very [steeply],” Mr. Coleman said.
The price increases for 63-year-olds were less dramatic: a 37.5 percent increase on average for women and 22.7 percent for men.
The study doesn’t include the federal premium subsidies offered to those earning 100 percent to 400 percent of the federal poverty limit, but Mr. Coleman points out that not everyone in that bracket qualifies because their premiums must exceed a certain percentage of their income.
“So you still have this issue of health insurance rising for that very young group and, depending on where they are with respect to income and premium, they may not qualify for a subsidy,” Mr. Coleman said. “That’s what we like to refer to as a subsidy gap.”
The report also notes that somebody pays for the subsidy, even if it’s not the policyholder.
“Another important consideration in the discussion of subsidized premiums is that the subsidized portion of the premium still must be paid by the government through the money it collects from the nation,” says the study. “In other words, the subsidized costs of health insurance do not disappear but instead change payers.”
A spokeswoman with the Department of Health and Human Services declined to comment because she had not seen the report.
The reasons for the premium increases start with the Affordable Care Act’s prohibition on rejecting applicants with pre-existing conditions, which means that insurance companies must account for the additional costs of covering chronically ill or disabled people.
Another cost driver is the heightened benefit mandate. The Affordable Care Act requires insurance policies to include 10 “essential health benefits,” including pediatric dental and vision care, maternity care and newborn care, even for policyholders with no children or whose children are adults.
“If you’re expanding the services you’re covering, and you’re increasing the number of less healthy people in your risk pools, that’s going to increase costs,” Mr. Coleman said. “Attendant to that would be an increase in premiums to be able to appropriately cover those costs.”
He also noted that the study doesn’t weigh policies based on enrollment, meaning that it includes the costs of insurance plans that may have few enrollees.
The report examines premium costs from the two largest metropolitan areas of each state, using data from public insurance records obtained from the Department of Health and Human Services.