Health care law will raise insurers' costs, actuaries say

Washington (CNN) – Republican opponents of President Obama's Affordable Care Act got some new ammunition this week: A study released by the Society of Actuaries on Tuesday predicts that costs could rise an average of 32% by 2017 for insurers serving the individual health care market.

Insurers in some states could see costs rise significantly more than that, the study reports, with increases estimated to top out at 80% in Ohio and Wisconsin, and 60% in California, Idaho, Maryland and Indiana. These increases could then be passed on to consumers through higher premiums.

Republican lawmakers were quick to highlight the news, with many turning to Twitter to tout the study's findings. Utah Senator Orin Hatch tweeted the estimated cost increases for his state using the hashtag "#BrokenPromise."


But there are several other states that could see significant decreases in insurer costs. According to the group's estimates, New York's insurance costs for individual plans could decrease by 14%, and costs in Massachusetts and Vermont could decrease by nearly 13%.

"In simplest terms, the states that will see large increases generally have low current individual costs and those showing decreases have high current individual costs, with all states moving closer together but at a higher level overall," Kristi Bohn, SOA's consulting health staff fellow, said in a statement released with the report.

Independent health policy analyst Larry Levitt from the Kaiser Family Foundation warned against interpreting the SOA's estimates as a "projection" or a "certainty of what's going to happen."
"Consumers shouldn't look at these numbers and automatically assume that this is what they're going to have to pay," Levitt said.

The SOA study makes many "speculative assumptions" that could have a sizable effect on the expected cost increases, Levitt said. For example, the SOA doesn't factor in government efforts to drive costs down for both insurers and consumers, and it assumes huge increases in the number of individuals purchasing insurance on the open market in future years.

Currently, individual purchasers make up only a small sliver of the nation's overall insurance market.

"Only about 15 million people buy insurance on the open market today," Levitt said. That means just 6% of those under the age of 65 purchase insurance as individuals.

"I don't think anyone expects significant [cost] increases in the employer market," where the majority of Americans get their health insurance, Levitt said.

At an off-camera briefing with economics reporters on Tuesday, Secretary of Health and Human Services Kathleen Sebelius acknowledged that some individuals in what she called the "underinsured market" could see health care costs increase in coming years, but she largely attributed those increases to improvements in the quality of insurance plans.

"These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market," Sebelius said. "But we feel pretty strongly that with subsidies available to a lot of that population, that they are really going to see much better benefit for the money that they're spending."

Those government subsidies weren't included in the SOA estimates.

Deputy Press Secretary Josh Earnest questioned the merits of the study at Wednesday's White House press briefing.

"I think that you're citing a study that I believe was conducted by a health insurance company that's critical of the Affordable Care Act," Earnest said. "So that part I'm not particularly surprised about."

While the SOA is not directly affiliated with a health insurance company, the group did retain an outside company, Optum, to help calculate its estimates. Optum is a subsidiary of UnitedHealth Group, which owns UnitedHealthcare, a health insurance company with nearly 4 million beneficiaries.

In response to the White House criticism, the SOA issued this statement: "The report was commissioned, paid for and overseen by the Society of Actuaries, the organization that credentials health actuaries. The analysis used a model that has been in use for more than 20 years by such organizations as the Pepper Commission and the Clinton Administration. The study was overseen by a project oversight group comprised of Society of Actuary members and its findings were exposed to the organization's membership for review and comment."

 

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