Here’s a chart from a new HHS study highlighting projections that without healthcare reform, premiums for individual and family health insurance would be 14% to 20% higher than with reform. The savings are expected to come from an expanded risk pool, reduced administrative overhead through the advent of health insurance exchanges, and increased competition and choice. Reform also provides families earning up to 400% of the federal poverty level subsidies or tax credits, further reducing their premium costs. Families paying the entire premium could save as much as $2300 annually on an $11,400 policy, the study notes. For families who receive subsidies the savings are much higher.
Trade group America’s Health Insurance Plans disputes the findings, noting that premiums tend to rise along with medical costs — and reform does very little to address cost trends. AHIP says the HHS report “overstates the cost savings associated with certain provisions of the new law and ignores major provisions that will raise premiums, including the new premium tax, age rating restrictions that impact younger workers, and benefit mandates.” Here’s a chart from AHIP illustrating the point:
Who’s correct? Maybe both HHS and AHIP. Costs do tend to drive premium increases — and costs are still rising. But as previously reported, there’s also the chance that the minimum medical cost ratio provisions of reform will cause plans to temper rate hikes rather than pay out big member rebates.