Tuesday, September 3, 2013

Rand Predicts HIX Price Shock Unlikely

Despite numerous predictions to the contrary, big jumps in premiums for policies sold through the new state-based health exchanges are unlikely, a Rand Corp. analysis has found.

Health Insurance Exchange:

English: Barack Obama signing the Patient Prot...
English: Barack Obama signing the Patient Protection and Affordable Care Act at the White House (Photo credit: Wikipedia)
The study, released last week by the nonprofit research group, projects that out-of-pocket premiums for most individuals who buy health plans through new insurance exchanges will actually decline due to federal subsidies. The report surveyed insurance markets in 10 states and the nation as a whole to project costs once the impact of the Affordable Care Act begins to be felt.
“Rates for policies in the individual market are likely to vary from state to state, with some experiencing increases and some experiencing decreases in cost,” Christine Eibner, a Rand senior economist and the study’s lead author, said in a statement. “But our analysis found no widespread trend toward sharply higher prices in the individual market.”
Maximum Out-of-Pocket Premium Payments Under PPACA
Maximum Out-of-Pocket Premium Payments Under PPACA (Photo credit: Wikipedia)
The web-based exchanges will begin offering health plans for sale in all 50 states plus the District of Columbia beginning October 1.
About 7 million currently uninsured people are expected to gain coverage through the online marketplaces in 2014, according to the Congressional Budget Office. Many of the newly insured are expected to be people in poor health who were previously denied coverage, and there have been numerous claims that this would cause premiums to rise across the board. Earlier this year, the Society of Actuaries predicted an average increase of 32 percent because of the ACA, which prompted outcries from the legislation’s numerous opponents.
English: Spending on U.S. healthcare as a perc...
English: Spending on U.S. healthcare as a percentage of gross domestic product (GDP). (Photo credit: Wikipedia)
The Rand study was conducted on behalf of the U.S. Health and Human Services Department. Looking at 10 representative states, Rand found that premiums in the individual market would likely rise in three of them (Minnesota, North Dakota and Ohio) and decline in two others (Louisiana and New Mexico). For the other five states (Florida, Kansas, Pennsylvania, South Carolina and Texas) and the nation as a whole, the Rand researchers concluded that “the law causes no change in premiums.”
Where higher premiums do occur, government subsidies will be available to offset them. Rand’s analysis determined that more than 60 percent of people who purchase health plans through a state exchange will get a discount.

The study also found that as a result of the ACA, the number of U.S. uninsured will fall to 8.2 percent by 2016, compared with 16 percent at present.
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