Health Insurance Premium Guessing Game
Health insurance issuers are generating enough fodder for a good guessing game. Will Obamacare increase rates for individual insurance or not? And if so, will the increase be modest or catastrophic. Writing in the April 25 edition of the Washington Post, Ezra Klein reports that the Blues plan that serves the national capital area is warning of big increases in individual premiums. The cause? More sick people are going to get health insurance, now that the pre-existing condition limitations have been removed by the Affordable Care Act. But is that the whole story? Klein also reports that insurance companies in Vermont and Rhode Island are projecting a more modest impact in announcing their proposed 2014 rates. But in Massachusetts, where “Obamneycare” has been in place since 2006, individual premiums are the highest in the nation.
The individual mandate, which gives people the choice of either getting insurance or paying a tax, is supposed to stimulate enrollment of healthy people who might otherwise go without coverage until they get sick. Why not, since they can’t be denied due to preexisting conditions? But the tax is less than the premium, so its anybody’s guess how effective the mandate will be in bringing low risk people into the insurance market.
Until we see how enrollment pans out this fall, and how many healthy people dive into the risk pool, there’s no way to know how big an impact the sick will have on premiums.
One thing Klein overlooked is that individual insurance will be sold both in the new health insurance exchanges (which the Feds are now calling “marketplaces,” a terminology change the rest of us are ignoring), and in the open market. Klein rightly points out that the impact of higher premiums will be ameliorated for many people by the subsidies that they get through the exchanges. But those who don’t qualify for the subsidies, whether they buy through exchanges or in the marketplace outside, will bear the full brunt of any premium increase. These are the folks who, if they are healthy, may well prefer to pay the tax and go without.
The Administration is gearing up for a major public relations campaign to publicize how health insurance will work for individual purchasers in 2014. We hope they will include a strong message about the importance of buying health insurance, even if you are healthy. While you may not be denied due to a preexisting condition, lack of insurance still leaves you open to catastrophic costs due to accident or unforeseen acute illness.
Health insurance: It’s not just a good idea, it’s the law!
Resources
Gorman Health Group policy expert Jean LeMasurier provides a summary of proposed rules from the Department of Treasury, IRS and OPM regarding the implementation of health reform.
The Exchanges will create a large risk pool that will allow risk to be managed more effectively with reduced administrative costs, read this white paper for estimates from the Congressional Budget Office (CBO) and more.
To learn how Gorman Health Group can help your organization get involved in the Exchanges or other government programs, visit our website.
Attend the GHG Forum, June 13-14 in DC, and hear from the nation’s recognized leaders in health reform implementation and ongoing development of exchanges about the challenges facing both the government and private partners pre-launch, plus what lies before us in 2014 and beyond.