ACA Effect on Insurance Premiums

The “reform” law made a number of dramatic changes to the private health insurance market, changing many standard practices and creating vast new markets through the public exchanges.  Concerns have been raised on the effect of these changes on the prices paid by individuals who are now mandated to have coverage and on employer costs for health benefits.   A report from the Rand organization looks at what the likely effect of all the changes will be on enrollment and premiums.  (Rand Report)  The authors used Rand’s long-standing insurance market model to try to understand these effects in ten geographically and demographically variable states.  The model suggests that about 8.2% of people will still be uninsured in 2016, assuming full Medicaid expansion, versus 19.6% if the law were not in effect.  In Minnesota the rate is projected to be only 5% and in Texas, 12%.  Without that Medicaid expansion, the rate of the uninsured would be several points higher.  The model also suggests that individual insurance enrollment will rise dramatically.  The effect on rates is projected to be more uneven, with no change in five of the ten states, increases up to 43% in three and decreases in two.  Similarly, small group enrollment is projected to rise while rates are relatively unaffected.  If the filings to date in various states are examined, however, the number and size of premium increases appears to much greater than Rand’s model suggests.   Rand and others tend to minimize the effect of premium changes by noting that many individuals will get subsidies.  This is very misleading; those subsidies are paid for by the public in the form of direct taxes, or indirect ones in the form of higher costs for all goods and services, or foregone wages.  The truth, which most proponents of the law do their best to try to ignore, is that the reform law is dramatically raising the cost of both health care and health care coverage for almost every citizen in the country.