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. Andrew C

    I would trust the SOA over the President's staff. A politician will say anything to get a vote.

    March 28, 2013 03:51 am at 3:51 am |
  2. Rob

    Millions of Americans can't even afford food and they talk about increased cost of MANDATORY insurance as if it were no big deal. But then if you make 100k a year or more and have your insurance free from the government, like they do, I guess it isn't a big deal. But the poor slop struggling on 30K a year with 2 or 3 kids, or worst, still unemployed, it's a very big deal

    March 28, 2013 05:44 am at 5:44 am |
  3. Marie MD

    Oh please, insurance carriers have raised their rates every year. I am paying more than ever and some of the clueless are blaing Obamacare which doesn't take place i full until 2014.
    This is another ploy by big corporations (those corporations are people too from the right) and the insurance companies.

    March 28, 2013 06:27 am at 6:27 am |
  4. Minnie Mouse

    It doesn't matter what the reasons or laws are. The insurance companies will raise the rates just because they know they can get away with it. In 1990 I was paying $5 a week for healthcare. Today the costs are anywhere from approximately $50-$200 a week, depending on your medical conditions. This is why price gouging laws need to be in every state, and not just a few states. Any business should not be allowed to raised the prices as often as they want, they should only be able to raise prices by a certain percentage in a certain time frame period.

    March 28, 2013 06:59 am at 6:59 am |
  5. Name lynn

    Now the republicans wants to rise medicare now after you all voted on same sex married, go ahead and try it, obama will not let the cost hurt the people.

    March 28, 2013 07:11 am at 7:11 am |
  6. A Kickin` Donkey

    If you are a Republican that WANTS TO BE PRESIDENT . . . that wants to be recognized as LEADERSHIP MATERIAL, do something on Healthcare to bring cost growth in-line with the rest of the Economy.

    That fact is, Republicans could not spell "healthcare" UNTIL Mr. Obama took action. They allowed DECADES of inaction.

    The ACA is a step forward. It probably can be improved but the idea that it is going to be repealed, defunded, etc. is just anti-Obama hatred and most sensible Americans won`t have that in a national leader.

    March 28, 2013 07:16 am at 7:16 am |
  7. Gurgyl

    Set up more government exchanges at lower price–use primary care by PAs, NPs etc, nab pharmacy industries, raise taxes on insurance guys and rich to cover this expenses. You win.

    March 28, 2013 07:16 am at 7:16 am |
  8. Jon

    You mean the lunch isn't free after all? Wow, color me SO SURPRISED.

    March 28, 2013 07:18 am at 7:18 am |
  9. Fair is Fair

    Nothing says "affordable" like the "Affordable" Care Act.

    March 28, 2013 07:44 am at 7:44 am |
  10. Fair is Fair

    "Those government subsidies weren't included in the SOA estimates."
    And who is paying for "those government subsidies"? Taxpayers, that's who. We get hit with higher premiums and higher taxes. Unless, of course, you pay no federal taxes.

    March 28, 2013 07:49 am at 7:49 am |
  11. Steve

    They should be find a way to limit the insurance company's take to 3-5%. Not 20% as the current law allows. I before the ACA act they took even more of the healthcare dollar. Because of the Healthcare act they are mandated to spend 80% of the premiums collected on healthcare or refund it back to policy holders. That law resulted in some 120 million refunds in Florida alone in 2011. The story is a bit misleading.

    March 28, 2013 08:08 am at 8:08 am |
  12. Rudy NYC

    They're complaining that there profit margin may or may not decrease from 40% to 20%. They fail to point out that no one's salary is going to be cut. They just don't like the idea of smaller bonus checks. Well, the consumer likes that idea. Why should 40% of their premiums go towards an executive's year end bonus check?

    March 28, 2013 08:12 am at 8:12 am |
  13. Charlie Daniels

    Nobody saw that coming!

    March 28, 2013 08:25 am at 8:25 am |
  14. James Bond

    And how long before people really cant afford it, but must carry it, i pay 19,000 before my insurance picks up a nickel, seldom use it either, these companies cry foul, all while making enormous profits, they seem to be untouchable

    March 28, 2013 08:52 am at 8:52 am |
  15. Sandra Nwankwo

    Once again, another desperate attempt to discredit obamacare by the republicans before their pockets offically start to run out empty.

    March 28, 2013 09:09 am at 9:09 am |
  16. Derrick, Atlanta

    Sounds like the big news isn't exactly that the overall cost goes up, but that premiums may indeed go up for some people – contrary to the president's promise that they'd go down. But if more consumers enter the insurance market, wouldn't you have already expected costs to go up for at least some people? Either way, there needs to be a more holistic study that takes into account the savings from having more competitive prices for health care services and pharma goods. There should be huge savings from that.

    March 28, 2013 09:11 am at 9:11 am |
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