March 27th, 2013
08:21 PM ET
10 years ago

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."

Filed under: Health care • President Obama
soundoff (41 Responses)
  1. Tony in Maine

    Yet another argument for single payer government administered health insurance which sets allowable fees for healthcare services and products – just like most of the rest of the civilized world. Access to health care should not be governed by the greed of providers or insurers.

    March 27, 2013 08:29 pm at 8:29 pm |
  2. Pete

    It's funny how they pounce on supposid negetives but republicans now seeing positives in the ACA bill will never publize it because they know they're wrong..This is just another in a number of inaccuracies that if you check its probibly from a republican leaning think tank or other like the Heritage group run by Demint to criminalize anything Pres.Obama does..By 2017 most of these health insurance premiums would be skyrocketing a lot more than the 60-80% if the bill wasn't concieved and economists have warned them of it..So to all you sanctumonious republicans who want to stay uninsured you do so at your own risk and I myself at least have Medicare a democraticly created program that's always been on the republicans crosshairs hasn't it being sucessful..Remember republicans you've never been sucessful in anything in helping Americans but you sure are good at least in trying to derail them aren't you!!Try putting some of that negetivity into productivity to the betterment of America because you're getting paid pretty well for it aren't yah!!

    March 27, 2013 08:41 pm at 8:41 pm |
  3. king

    why are folks taking special interest groups research as fact. its like saying michelle baukman will reveal fact on anything Obama does. these folks that are putting out this crap are either political fear mongering, or they are doing it because of their own financial interest. Ive been through four years of the worst conspiracy theorist, and fear mongering that Ive ever encounter. nothing is straight down the middle anymore. their is very few truth tellers out there because every one has their hands in the cookie jar. i say lets experience the healthcare law before facts can reveal, and stop lessening to the chalked up crap from special interest groups. Obama and the CBO had always stated that the cost would rise then it would go down again, so why is this news. we are adding 30 million people to the law for crying out loud, what is the big news here.

    March 27, 2013 08:43 pm at 8:43 pm |
  4. Concerned citizen

    Yeap, some of those insurers have to get used to new profit line: no more 30% profit each year; it may go down or up! Vultures!

    March 27, 2013 08:48 pm at 8:48 pm |
  5. thomase

    Oh, that's so terrible! Instead of grossing billions hand over fist, they'll be grossing slightly less billions hand over fist!

    March 27, 2013 08:57 pm at 8:57 pm |
  6. ghostriter

    Ok, summation:

    Rates could go up on those who are currently underinsured. which I take to mean that they only have some basic form of insurance with a high co-poy, deductible, etc or those puchasing individual insurance. Which is a small part of the market. The rate increases are not across the board as some states will see a decrease, but the overall affect could be an increase. And it doesn't take into account the subsides available to most folks.

    March 27, 2013 09:03 pm at 9:03 pm |
  7. Oakspar77777

    Obamacare – Health Care (Insurance) Reform turns out to be exactly what we have known it was since they shoved it through Congress – a bad deal for the American People.

    March 27, 2013 09:06 pm at 9:06 pm |
  8. Bob

    It will increase the cost TO INSURERS but not to society. Before the ACA, we had Socialism but not for the people, but instead for the Health Insurance Companies. These companies were licensed to offer health insurance and are partially reimbursed by tax payer money BUT they never had any risks. The second a person got sick (i.e. they stopped being a source of anything but being a piggy bank in the form of insurance payments) the company would dump them. The person then either had to go onto Medicare, Medicaid, or simply wait until they were critically ill and go to an emergency room. In all cases, tax payers foot the bill. This dysfunctional system is what is causing health care costs to go out of control. It is MUCH cheaper to treat someone with say $50 of insulin a month rather than wait until they collapse into a diabetic coma and incur hundreds of thousands of dollars in emergency room costs, lose a foot, or go blind and then spend the rest of their life on disability and welfare. So if insurers want to reap the profits of offering insurance, THEY (not tax payers) need to also assume the risks. THAT'S capitalism. If insurance companies don't want to do that, they ge rid of all of them and let the government cover everyone. That's the cheapest way and most efficient way. Ask yourself this- if Universal Health Care is so terrible and such a economy killer, why has not a single country (of the dozens of first world nations) that has adopted Universal Health Care ever gotten rid of it? Hawaii has had it for decades and they aren't hurting financially (certainly no worse than any other state). Massachusetts isn't getting rid of theirs anytime soon. So how terrible can it be? Private insurance is what civilized countries GET RID OF when they join the first world. So switch off your Saudi-owned fake news channel (AKA Fox) and look around the rest of the world and see what other states and countries universallly recognize as a better system.

    March 27, 2013 09:09 pm at 9:09 pm |
  9. Gorbashov - Long Beach, Ca.

    Oh, United Healthcare, you mean that company fined miilions of dollars for Medicare fraud that was run by a guy that should be in prison instead of residing in the Governors mansion in Florida.

    Yeah, prettty credible. LOL

    March 27, 2013 09:12 pm at 9:12 pm |
  10. Getoverit

    This just in! CNN exclusive! Obamacare will drive health care costs up! LMFAO!

    March 27, 2013 09:21 pm at 9:21 pm |
  11. la la lam

    No one comments on the basic concept that everyone missed? If you require everyone to get a product or pay a fine, that increases the demand for a product ten fold. Based on that insurance companies can and should charge as much more as they want. The actual cost of insurance will go up because all those unpaid emergency visits every year are still going to happen. Just now they don't get written off the government's budget. They come out of the insurance companies which means the come out of the consumers. So we will all pay more every year, insurance companies will make more money, and the president gets to say he reduced the bills because he forced them on us before taxes so the government doesn't have to pay for it. I will likely never vote democratic ever again, there are too many idiots that aren't socialists but they think things will get better with socialist ideals. Its a broken system at best.

    March 27, 2013 09:45 pm at 9:45 pm |
  12. S.B. Stein

    When the subsidies are taken into account, then what do they say?

    March 27, 2013 09:59 pm at 9:59 pm |
  13. HenryMiller

    "Health care law will raise insurers' costs, actuaries say"

    Surprise, surprise!

    "These increases could then be passed on to consumers through higher premiums."

    "Could be?" Is that the Lefty euphemism for "definitely will be?"

    March 27, 2013 10:23 pm at 10:23 pm |
  14. Dan5404

    Perhaps they should have considered where health care costs are right now and the huge increases in premiums that many insurance companies are implementing every year. Also, the main problem for those costs are provider charges by hospitals, drug manufacturers, doctors and medical equipment manufacturers. Read the Time Magazine very in-depth investigation into the sometimes extremely shocking money being made by many of these people, especially CEOs, even non-profits. As this article said, many people will see affordable health care for the first time, and with Obamacare cracking down on fraud and the ridiculous price-gouging by providers, the costs will get better as it goes along. It will make poor people healthier, remove prior condition refusal of coverage and many egregious practices of insurance companies. The only thing better in the long run would be single payer universal healthcare.

    March 27, 2013 10:25 pm at 10:25 pm |
  15. Tom Rice

    What were the estimates running of uninsured Americans? About 40 million? That's about 11.5% of a 350 million population. And we can fix this by just raising rates 33%? What a deal! Oh, and Secretary Sebelius? That "subsidy" money that your administration is so generously kicking in to help people pay those rates? You get that from taxes. Our taxes. You aren't subsidizing anything. We are.

    March 27, 2013 10:52 pm at 10:52 pm |
  16. Loyalright

    I guess now that the ACA has been passed, we are finding out what is in it and I don't think most tax payers are liking what they are finding.

    March 27, 2013 11:10 pm at 11:10 pm |
  17. Ben

    It makes sense, you put more people in, who can't afford to pay as much as you,your cost will probably go up, in health insurance, or in taxes.

    March 28, 2013 12:27 am at 12:27 am |
  18. Jeff Brown in Jersey

    Of course the cost will go up. Instead of letting people die and suffer, they will actually have to pay for treatment...DUH!

    March 28, 2013 12:29 am at 12:29 am |
  19. Truthhurts

    American doctors are increasingly concerned about changes already implemented or coming to the health-care system, and some are opting to retire sooner than planned.

    March 28, 2013 12:33 am at 12:33 am |
  20. Monomachos

    What a surprise! A government program that will cost more than its supporters claimed. Who didn't"t see this coming? The lawis so ill-conceived that it contains more big surprises like this and will end up costing far more than anticipated. Godd thing our national debt is not already a problem.

    March 28, 2013 12:38 am at 12:38 am |
  21. sally-ann

    The poor pay nothing. The middle class pay a % of income and get tax credits to pay the rest. If you get insurance at work or are on a state plan you still only pay a % of income and get tax credits. Even if costs go up people still pay less out of pocket expenses.

    March 28, 2013 01:32 am at 1:32 am |
  22. RightArmOfFreedom

    They need to just kill it now. Its going to be thrown out as soon as Obama leaves office either way. Stop wasting trillions in something that is not going to work.

    March 28, 2013 02:23 am at 2:23 am |
  23. basedonfact

    Is anybody surprised that actually covering sick people instead of just dropping their policies at the firt sign of major illness will cost the insurance companies more? It will still be cheaper than covering their costs at the ER on the taxpayer dime

    March 28, 2013 02:35 am at 2:35 am |
  24. KenneyP of Colorado

    This report was prepared by the mouth piece of the insurance companies who are against the Affordable Care Act. The report does not factor in government subsidies which will decrease the costs.

    Additionally 6% of the overall population will see a 35% increase while the remaining 94% will not see an increase.

    This is a something that the insurance companies have come up with to be used by their buddies, the Republicans, to scare the American people in continuing the status quo. Wish the Republicans would fight as hard for the individual hard working Americans as they do for corporations who line their re-election campaigns.

    March 28, 2013 03:05 am at 3:05 am |
  25. co-man-senz

    Interestingly I wonder since preventive care wil be more widely available, if there are projecions. my guess is the projections in the report are based on current cost data. I wonder if there is data showing longer term cost reductions based on responsible use of preventive care such as dental visits, yearly checkups, and full panel blood work.

    March 28, 2013 03:12 am at 3:12 am |
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