Study says not to expect Obamacare premium spike
August 29th, 2013
01:32 PM ET
1 year ago

Study says not to expect Obamacare premium spike

Washington (CNN) - A new study released Thursday by the nonprofit RAND Corporation estimates that consumers purchasing health insurance on the individual market will see little or no increase in their premiums when the Affordable Care Act is more fully implemented later this year.

"Our analysis shows that 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," said Christine Eibner, lead author of the study and a senior economist at RAND. "But our analysis found no widespread trend toward sharply higher prices in the individual market."

The study used modeling to look at ten "representative states" as well as the country as a whole. In five of those ten states, RAND finds no increases when the costs of individual plans offered today is compared to cost estimates for comparable plans offered in the insurance exchanges opening on October 1. Consumers in three states – Minnesota, North Dakota and Ohio – could see their premiums increase by as much as 43%, while in the final two states – Louisiana and New Mexico – consumers could see their premiums decline. Nationwide, the study estimates that premiums will remain stable.

Under Obamacare, plans offered in the new insurance exchanges will be tiered based on their actuarial value – or the percentage of health care costs that they cover. Due to heightened minimum coverage requirements, the lowest – or bronze – tier has a minimum actuarial value of 60 percent, which is significantly higher than many of the cheapest plans currently offered on the individual market.

This means that the government's new coverage mandates may force some consumers to pay more, but the law's supporters are quick to point out that they'll be purchasing much more comprehensive insurance.

None of the study's cost estimates take into account federal subsidies that will be available to help offset the cost of insurance for lower-income Americans. The study predicts that at least 60 percent of those entering the individual market in the ten states it analyzed will be eligible for federal assistance, and in South Carolina the number could be as high as 75 percent.

Additionally, the study found that the ACA could reduce the number of uninsured Americans by more than half if additional states take advantage of the federally-subsidized Medicaid expansion. Without the ACA, RAND estimates that roughly 20 percent of Americans would be uninsured in 2016, but if every state expanded access to Medicaid, that number could drop as low as 8 percent.

So far just 25 states have signed onto the Medicaid provision of Obamacare after that portion of the law was ruled optional by the Supreme Court. As there's no deadline to expand Medicaid eligibility, Obama administration officials are hoping that if the plan is successful in early-adopting states, the other half of the country will soon follow suit.

In calculating the effect that expanding Medicaid can have on the number of uninsured, RAND looked at three states – Texas, Florida and Louisiana – whose governors have chosen not to move forward with expansion. The study concludes that combined, an additional 2.3 million people will be without insurance because of the decision not to expand Medicaid, and the rates of uninsured in each state is estimated to increase by at least 5 percent.


Filed under: Health care
soundoff (17 Responses)
  1. Gurgyl

    Government should sell at Cheaper prices in State Exchanges and if state declines throughFederal Government Health Exchanges. Period. That way it is a source for government to run the show.

    August 29, 2013 01:39 pm at 1:39 pm |
  2. HenryMiller

    "None of the study's cost estimates take into account federal subsidies that will be available..."

    They're not "federal" subsidies, they're taxpayer subsidies that force some people to pay part of the insurance of others, in effect raising the cost of Obamacare for some while giving others a free ride. How is this even remotely fair?

    And if there's no "spike" in premiums, it's because those premiums have already risen by an average of about 20% over the last couple of years.

    Obamacare is a rip-off for responsible, taxpaying, people and just one more freebie for the welfare class.

    August 29, 2013 01:40 pm at 1:40 pm |
  3. Rudy NYC

    Fair is Fair wrote:

    It's not the employer who is raising premiums, it's the insurance carrier, and there are reasons. There IS cost to keep a person covered to age 26. There IS cost to cover pre-existing conditions (ever try to have your car insurance pay for damages caused by a pre-existing auto accident?). The insurers are passing these costs along to the empolyer, who pass it on to the employee.
    -----------------
    That's altruistic sounding nonsense to me. Profits are capped at 20% of premiums. Insurers are raising premiums to maintain their past net profit numbers. For example, if the made $400 million profit off of $1 billion in premiums, the new law says their profits would be capped at $200 million.

    So, they raise their premiums to $2 billion, pay out a few more bucks in coverate to make themselves look good, but still maintain that annual $400 million in profit. THAT is what's really going on inside of the board rooms. It's more than about the money, it's about the where the profit goes.....and it goes towards their salaries and profit based bonuses.

    August 29, 2013 01:41 pm at 1:41 pm |
  4. just saying

    they used modelling which is on;ly as good as all of the assumptions built into the model. reality is proving otherwise as shown in a story on cnn today. obamacare is contributing 3-4% i believe it said.

    August 29, 2013 01:50 pm at 1:50 pm |
  5. jboh

    The conservative Rand Corp. says no drastic increase. New York-50% cut. Calif.-39% cut. One more flush of the tea pot.

    August 29, 2013 01:58 pm at 1:58 pm |
  6. Tony

    Studies say that Republicans will ignore this study.

    August 29, 2013 02:13 pm at 2:13 pm |
  7. Data Driven

    @HenryMiller,

    "taxpayers subsidies"

    Oh so what. We'll talk about what's "remotely fair" after we cut the Pentagon's budget by half and end all energy/agriculture subsidies. Also, we could get out of Afghanistan pretty much NOW (well, after we're done physically destroying all our combat hardware in-county because it's not worth shipping back), oh, oh, and not start ANOTHER stupid war in, say, Syria.

    August 29, 2013 02:23 pm at 2:23 pm |
  8. Sniffit

    "Studies say that Republicans will ignore this study."

    Haha! Indeed.

    August 29, 2013 02:29 pm at 2:29 pm |
  9. Tampa Tim

    For a nurse, Fair seems to have little knowledge of ACA. At least some wingnuts are starting to realize that Fox, Limbaugh, Hannity, Beck, and elected republicans have been lying to them.

    August 29, 2013 02:36 pm at 2:36 pm |
  10. Sniffit

    "They're not "federal" subsidies, they're taxpayer subsidies that force some people to pay part of the insurance of others, in effect raising the cost of Obamacare for some while giving others a free ride. How is this even remotely fair?"

    Actually, in states and in the cases where certain people are going to find their premiums going up, it's largely a result of their premiums already being unfairly deflated by the exclusion of others from the market as a result of pre-existing conditions and other exclusionary practices that were allowed by that state's insurance laws. Their pandering to the insurance industry in their states allowed the insurance industry to create pools of insured folks who were more unlikely to need any major health care coverage than the population at large. That selectivity depressed premiums while raising profits for the insurance companies, BUT it did so on the backs of the uninsured. There's no way for you to argue it didn't. You want to tell us why you should be allowed to pay a lower premium and to achieve that by forcing someone else to go without insurance so that their presence in the risk pool doesn't raise your premiums? Want to start with an explanation of the very root concept of insurance as a risk pooling device across populations, the structure of insurance companies and the industry itself and then explain why it's fair and just for the model to have at its core the idea that only those who need it least are allowed to get it so that they can pay a lower price by excluding those who need it most? You seem real charged up and ready to go in terms of talking fundamental fairness, so let's hear your justifications for insuring the healthy on the backs of the sick.

    August 29, 2013 02:36 pm at 2:36 pm |
  11. Name jk. Sfl. GOP conservatives,the garbage of America.

    The GOP governors have been trying to sabatuageing the aca sence day one by not coperateingwith any portion of the act, but will probably be thrown out of office when their supporters see the savings from the aca, seniors signed up for madicare part D have saved 6.3 billion on prescriptions sence the bill was signed and their kids can stay on their parents policy till age 26. In Florida where Scott the soon to be x govenor and the rest of the GOP are throwing up every roadblock they can think of to block it and will pay with their jobs in 2014 midterm elections !!!!

    August 29, 2013 02:43 pm at 2:43 pm |
  12. Jeff Brown in Jersey

    Bet you won't hear a peep out of Faux "News" about this.

    August 29, 2013 02:44 pm at 2:44 pm |
  13. just saying

    well what people are actually paying is surely going up for many. not only do i have to pay for the increase in my coverage and that of my family, i am also paying for healthcare coverage for others, through new and increased taxes. and what about all those people who decided they didn't need coverage? their costs are going up many thousands of dollars a year.

    the only people paying less ar ethose getting free government healthcare (that the rest of us pay for) or people getting government subsidized healthcare (the the rest of us are paying for).

    August 29, 2013 02:50 pm at 2:50 pm |
  14. Sniffit

    "i am also paying for healthcare coverage for others"

    You have been all along. Ignoring that fact doesn't make it go away.

    August 29, 2013 03:02 pm at 3:02 pm |
  15. Gunderson

    What Say,
    Insurance Companies already raise rates. They knew what coming. But deal's with insurance companies not done. Why? Because few people sign up. They try sell Platinum Plan with Cardboard rates. Putin Care sold with Caps to those that pay. No can do. Called Economics 101. Can't have Silver Platter service with funny money.

    August 29, 2013 03:14 pm at 3:14 pm |
  16. Boomer in Mo

    Good grief. The tea partiers are going to need mental health care after this announcement, particularly since it is from one of their favorite think tanks. If the GOP would come up with a reasonable replacement for Obamacare that prevents excess profit taking by insurance companies, controls costs for meds and care in a responsible manner and requires health insurance company to take all applicants, not just healthy ones, we'd all be better off. But, they won't so I'll stick with Obamacare because it is better than nothing.

    August 29, 2013 03:18 pm at 3:18 pm |
  17. Lynda/Minnesota

    "After all, it was Mitt Romney's idea."

    Let us also include the Heritage Foundation ... just to be fair. I suspect DeMint is rewriting Heritage clauses and bylaws as I type.

    August 29, 2013 03:23 pm at 3:23 pm |