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Another Survey Highlights the Importance of Reform

A look at the Affordable Care Act and premiums.

Yesterday, a new survey from the Kaiser Family Foundation highlighted one of the  problems in the individual health insurance market the Affordable Care Act was designed to address:  unaffordable premium increases.

The survey was conducted before the Affordable Care Act became law and found that the average premium increase for consumers in the individual market was 20 percent and 77 percent of consumers in the individual market reported that they faced a premium increase.  40 percent of those who purchase their own coverage say they are “not too confident” or “not at all confident” that they will be able to pay their usual medical bills. More than 1 in 5 say that over the past year they or a family member covered by their plan didn’t get needed medical care because of the cost, and 20 percent skipped filling a prescription due to cost.

The Affordable Care Act will help address this problem and strengthen the health insurance system for everyone. The law starts by helping to prevent unreasonable premium increases by requiring insurance companies to publicly justify unreasonable increases. Companies will also have to spend more of your premium dollars on medical claims, not salaries and overhead. If insurance companies raise rates too high between now and 2014, they could be excluded from the new health insurance exchanges and lose access to millions of new customers. And we are encouraging states to crack down on premium hikes and providing states with $250 million in grants to do so.

States are already taking action:

  • In California, the Obama Administration and the state Insurance Commissioner called on Anthem Blue Cross to justify its proposed 39 percent increase. Upon investigation, the state determined that there were significant errors in the rate filing and Anthem Blue Cross withdrew the rate increase. On June 16, the Insurance Commissioner announced that rate hikes by the state’s four largest health insurers will be subject to an independent actuarial review.
  • In New York, the state legislature recently passed and Governor signed legislation granting the state authority to review and approve health insurance premiums before they take effect, and increasing medical loss ratio percentages, with which insurers in the state must comply.
  • In New Mexico, Insurance Superintendent Morris J. “Mo” Chavez resigned after he approved, without public hearings, a Blue Cross Blue Shield NM individual health insurance rate hike of 24.6 percent.  The New Mexico Public Regulation Commission requested last month that the Insurance Superintendent suspend the rate increase and start another review. 
  • In Iowa, the Insurance Commissioner disapproved a 20 percent proposed increase by Gemworth, and reduced a 60 percent proposed increase by American Community Mutual to 16.5 percent.
  • In Maine, Anthem Blue Cross’s request to raise rates by 18.1 percent was rejected by the state and a state court reaffirmed the state’s right to review premium increases.
  • In Pennsylvania, the state is investigating premium increases made by nine of the state’s largest health insurance companies.
  • In Massachusetts, state leaders capped rate increases requested by insurance companies.

Today, President Obama will be meeting with insurance company CEOs and insurance commissioners to discuss the Affordable Care Act and in the meeting, he will reiterate his pledge to help protect consumers from unfair premium increases. Later, he’ll announce the release of a new benefits for consumers in a speech in the East Room. You can watch the speech here at 11:45 AM.

Stephanie Cutter is Assistant to the President for Special Projects