Rand Study Predicts No ACA “Rate Shock”
A report by the nonprofit institution, RAND , and sponsored by the U.S. Department of Health and Human Services (HHS), may help to alleviate concerns about the Affordable Care Act leading to higher health insurance premiums.
Insurance carriers can no longer deny coverage for pre-existing conditions or charge higher premiums based on health status or previous claims experience.
Prices for all consumers will rise in order to cover those with health conditions. This applies to age as well, with the younger population paying higher premiums to help control prices for older consumers.
All adults must obtain minimum essential coverage or face penalties.
Consumers will no longer be able to obtain lower levels of coverage with lower premiums and will be forced to obtain more comprehensive coverage which may have high premiums.
In the report, The Affordable Care Act and Health Insurance Markets, Simulating the Effects of Regulations, the authors predict the effects of the Affordable Care Act on health insurance enrollment and premiums for markets in ten states: Florida, Kansas, Louisiana, Minnesota, New Mexico, North Dakota, Ohio, Pennsylvania, South Carolina, and Texas; as well as, the United States overall.
The report also looks at two decisions facing states:
- Whether to expand Medicaid to cover adults with incomes below 138 percent of the Federal Poverty Level (FPL).
- Whether to merge or combine their small group and non-group risk pools. If the groups are merged, enrollees in the small group and non-group market would face the same premiums. If the groups are split, the premiums in the two markets could diverge.
The report concludes that the ACA will lead to an increase in enrollment and insurance coverage for all ten states and the United States overall. The report estimates that the 2016 uninsurance rate without the ACA would be 19.6 percent and that with the Act, the unisurance rate will be 8.2 percent, with variations on those figures across states. While overall premiums may increase, due to eligibility for federal subsidies, actual out-of-pocket premiums may decrease.
Out-of-pocket premiums for most individuals who buy health insurance through the exchanges will decline as a result of federal subsidies, even if before tax-credit premiums are higher. Subsidized coverage through the online marketplaces is available for individuals under 65 years of age with incomes between 133 and 400 percent of the federal poverty level ($15,302 to $46,021 for an individual and $31,155 to $93,700 for a family of four, if you make less than $15,302 you may qualify for Medicaid)
For five states and the nation overall, the ACA will have no effect on individual premiums.
Florida, Kansas, Pennsylvania, South Carolina, Texas
For three states, the report estimates there could be a premium increase of up to 43 percent for individuals, not taking into account federal tax credits.
Minnesota, North Dakota, Ohio
Two states could see a decline in premiums as a result of the ACA
Louisiana, New Mexico
In the small group market; Kansas, North Dakota, and Pennsylvania may see slight declines in small group coverage. Overall, little effect on small group premiums is expected.