NCPA - National Center for Policy Analysis


July 22, 2010

State and university employees with families can expect to see their monthly health insurance costs rise as much as 37 percent next year, depending on the type of plan they choose, says the Arizona Republic.  Figures provided by the Arizona Department of Administration show that health plans for families and single adults with children will shoulder the most expensive monthly premium increases beginning Jan. 1, 2011, while individuals will pay modest increases. 

Arizona's Department of Administration cited federal health reform as the reason the state's health plans will carry "greater expenses and higher premiums for members," according to a June 30 letter sent to about 135,000 state and university employees and their dependents. 

The letter named two provisions that the state expects will drive health insurance costs higher: 

  • One is a requirement that insurance plans provide coverage for dependent children up to age 26.
  • The other is the federal legislation's ban on lifetime limits, an insurance industry practice that cuts coverage once an individual's medical expenses exceed a set amount over their lifetime.  

Because the state is one of Arizona's largest providers of health insurance, its estimates could provide an early glimpse of how large employers will pass along health reform costs to their employees, says the Republic. 

Industry analysts say it is too early to tell how much health reform will impact the cost of insurance: 

  • Some estimates expect the initial impact on overall cost will be less than 2 percent.
  • Many analysts agree that the true impact won't be known until 2014, when health insurance exchanges are established to extend coverage to the estimated 32 million Americans who now lack health insurance.  

Alan Ecker, a spokesman for Arizona's Department of Administration, said health reform is "responsible for all increases for employee premiums" next year. 

He noted that federal health reform passed after the Legislature approved funding for next year's state health plan, so with no money left in the state coffers to cover the mandated changes to health insurance plans, the state opted to shift costs to employees. 

Source: Ken Alltucker, "State tells employees health insurance will rocket," Arizona Republic, July 21, 2010.

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