Medical insurance claims for individual policies in California will cost insurers 62 percent more by 2017, a risk-management group predicts.
The figure is near the top of cost increases seen for each state under the Affordable Care Act.
The costs do not necessarily mean premiums would increase by that amount because numerous other factors come into play, the Society of Actuaries said in its report of March 26. Still, claims costs are the most significant driver of premiums, the group said.
The report on the impact of health care reform did not include employer health insurance policies, which cover most Americans.
The largest cost increases for individual policies are expected in Ohio (81 percent) and Wisconsin (80 percent). Decreases are predicted for New York (14 percent less), Massachusetts (13 percent) and Vermont (12.5 percent).
Health and Human Services Secretary Kathleen Sebelius, charged with implementing the Affordable Care Act, said the report’s comparison with individual policies currently in effect is apples and oranges:
“Some of these folks have very high catastrophic plans that don’t pay for anything unless you get hit by a bus,” she said at a White House briefing.
“These folks will be moving into a really fully insured product for the first time, so there may be a higher cost associated with getting into that market,” Sebelius said.
The risk-forecast report also did not take government subsidies into consideration, Sebelius noted. Employer plans are “likely to see very little impact,” she said.
The Affordable Care Act lays out a required “essential benefits” package that includes items such as mental health care, emergency services and well-woman care, which often are not included in individual policies written today.
Kristi Bohn of the Society of Actuaries said the study suggests that “when the dust settles by 2017, we can expect mixed results on the reform bill’s goals of expanding coverage and reducing costs.”
The legislation will significantly reduce the number of Americans who are uninsured, Bohn said, resulting in lower average costs over the long haul. But she cited “other changes in composition of the individual market” that would offset these savings.
Another factor is integration of the states’ “high-risk pool” residents (typically with pre-existing conditions) into the new health marketplaces. The impact of these members’ higher costs will be concentrated in the individual markets, the actuaries said.
Enrollment in the individual health insurance market is projected to be almost 115 percent larger by 2017. About 80 percent of those newcomers would get coverage through the state exchanges such as Covered California.
Actuaries mathematically evaluate the probability of events and quantify their impact. The risk projections are vital to the insurance industry.
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