RAND Study Points to Lower HIX Premiums Than Critics Predicted

by Patrick Riley 30 Aug 2013
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Last year, the Society of Actuaries published their predictions for an anticipated 32% increase in health insurance premiums as a direct result of the Affordable Care Act. This caused a landslide of criticism and outcry from opponents and supporters of healthcare reform. RAND Corporation just looked at 10 states for 2016's anticipated rise or fall for insurance premiums and found that the largely publicized double digit increases may not be valid.

Of the 10 states evaluated, only 3 (Minnesota, North Dakota, and Ohio) may have an increase in annual premiums. In Louisiana and New Mexico the premiums are expected to go down compared to how the market would perform without the Affordable Care Act. For the remaining 5 states (Florida, Kansas, Pennsylvania, South Carolina, and Texas) and the country as a whole, RAND's report shows "the law causes no change in premiums." These findings are in stark contrast to the continued claim that as a result of the ACA health insurance premiums will double or even triple.

The research also found a dramatic increase is expected for the number of people who would likely receive health insurance. The number, or percentage of people may double for individuals, climbing from 4.3% to 9.5% for those under the age of 65 in 2016.

Health and Human Services (HHS) commissioned the study aand found some troubling news along with the premium increase good news. "The study found small increases in coverage are likely in the small group market, and minimal differences in premiums, with and without the law. But one of the law's major goals was to provide small businesses lower premiums by given them better bargaining power.

Bottom line is that predicting premiums is a very risky venture as the ACA introduces complex changes to market dynamics and comparative analysis using historical data to predict uncertainties as to how the industry will respond is challenging, at best. And by comparing premiums with or without the ACA is even more open ended and fraught with influencers never evaluated before. So, caution is urged before making bold commentary about premiums going up or down.

You can follow my continued dialogue about health insurance marketplaces on Twitter @Patrick_FrostHC.

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