NCPA - National Center for Policy Analysis

Medical Claims Costs to Rise in Individual Market under Health Law

March 27, 2013

Medical claims costs -- the biggest driver of health insurance premiums -- will jump an average of 32 percent for Americans' individual policies under President Barack Obama's overhaul, according to a study by the nation's leading group of financial risk analysts, says the Associated Press.

  • While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.
  • The disparities are striking: By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland.
  • Much of the reason for the higher claims costs is that sicker people are expected to join the pool.

The report did not make similar estimates for employer plans, because the primary impact of Obama's law is on people who don't have coverage through their jobs.

The administration questions the design of the study, saying it focused on only one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick.

But a prominent national expert, recently retired Medicare chief actuary Rick Foster, says the report does "a credible job" of estimating potential enrollment and costs under the law, "without trying to tilt the answers in any particular direction."

Source: "Claims Costs that Drive Premiums Will Rise 32 Percent in Individual Market under Health Law," Associated Press, March 26, 2013.


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