Today’s Wall Street Journal reports that some health insurance companies are blaming the Affordable Care Act for premium increases that were planned long before the law was passed. We knew this would happen, which is why the President called on insurance companies not to use the Affordable Care Act as an excuse to implement unreasonable premium increases. In fact, when one insurance company in the State of Washington was called out for telling its beneficiaries that rate increases were due to the Affordable Care Act, that company agreed to issue a new letter clarifying the reasons for the increase.
The premium increases discussed today – many of which were planned before the Affordable Care Act was even signed into law– demonstrate that reform came at a critical time. In fact, consumers have faced unreasonable double digit premium increases for more than a decade, including employer-sponsored plans where premiums have more than doubled since 2000.
The most recent round of premium increase announcements are at odds with a number of health care cost related projections. The Bureau of Labor Statistics reports that medical inflation is currently projected to be 3.2 percent this year. Similarly, The Kaiser Family Foundation concluded that family premiums were rising only 3 percent for this year. Finally, we estimate that any potential premium impact from the new consumer protections and increased quality provisions under the Affordable Care Act will be minimal – no more than 1-2 percent -- which will be further offset by other out of pocket savings implemented in the law. Here’s how:
The Affordable Care Act also includes new resources and authorities to crack down on unjustified rate hikes. Today, 46 states are using resources under the new reform law to pass or strengthen rate review laws which will have a significant impact on keeping rates low. In a number of states (California, Massachusetts, Maine) regulators have already reviewed and rejected these proposed increases. We expect this pattern to continue.
And the new law provides HHS with new authorities to prevent unreasonable increases, including:
When reform is implemented, costs will be reduced across the board, premium increases will need to be justified and consumers will be protected.
Stephanie Cutter is Assistant to the President for Special Projects