One of the biggest criticisms of the Affordable Care Act is that health insurance premiums will rise. The cost of premiums has already increased up to 4 percent in the past year. So is the ACA living up to its name? Let’s take a closer look.
Last Tuesday, the Maryland Insurance Administration released rate proposals from insurers for the new exchange in October. In the proposals, from a wide variety of insurers, new plans are the only ones that see a rate increase. This is because insurers are expecting the newly insured people in 2014 to be sicker so they plan to charge more. This also represents one of the major faults of our current health care system — those who are sicker are less likely to have access to care. Fortunately, many of the people who will be buying new plans (about half of the newly eligible in Maryland) will be able to receive subsidies to help pay for care.
Though insurers are saying the additional 12 percent of currently uninsured Marylanders is going to cost them more, the individual mandate was what insurance companies negotiated for in the first place in return for accepting people with pre-existing conditions and giving up recessions of coverage. Plus, the current rate proposals are not just estimates, but they also must be approved by the insurance administration. A major regulatory rule of the ACA (also known as the Medical Loss Ratio) requires 85 percent of group plan costs (80 percent for individual) must be spent on medical coverage or quality improvements instead of administrative cost. If they don’t follow this, they must give customers a rebate.
The newly 32 million people who will be getting health insurance in 2014 may be sicker yes, but that doesn’t mean they won’t be relatively easy to care for. Most of these people don’t have insurance because their job doesn’t provide them with it, not because of deathly pre-existing conditions. Most of these people will most likely be sick with diabetes or cardiovascular disease — two of the most common causes of morbidity and two illnesses that are relatively easy to control with proper medication. This thinking just comes from my experience as an EMT and as a volunteer with Charm City Clinic.
What’s more is that the ACA has provisions that target increases in premiums. For the first three years of the exchanges, the reinsurance program will help pay for the higher cost of newly insured sicker patients and the temporary risk corridors program will help protect inaccurate rate-setting. The law also sets limits on cost-sharing or charging healthy young people more to pay for the sick older people. Previously, the difference had been 6-to-1 but now will be at most 3-to-1. It’s true that some people may start paying more for health insurance, but they are also more likely to receive better insurance too since Obamacare mandates minimum required benefits.
As I’ve said before, Obamacare focuses on access to care rather than cost control, which makes its official name — the “Affordable Care Act” — very misleading. In addition to increasing medical prices, the biggest obstacle so far for Obamacare is getting the word out about eligibility for insurance and subsidies. The exchanges are supposed to ready to go in October, so pretty soon we better start seeing some kind of major outreach. So much of what Obamacare promises is still just speculation; it’s hard to know where it will end up. But we do know one thing is for certain — Obamacare gives the opportunity for millions more of the neediest people to have access to care when they otherwise wouldn’t.
