Health insurance premiums may as much as double for some small businesses and individual buyers in the U.S. when the Affordable Care Act’s major provisions start in 2014, Aetna’s chief executive officer said.
While subsidies in the law will shield some people, other consumers who make too much for assistance are in for “premium rate shock,” Mark Bertolini, who runs the third-biggest U.S. health-insurance company, told analysts yesterday at a conference in New York. The prospect has spurred discussion of having Congress delay or phase in parts of the law, he said.
“We’ve shared it all with the people in Washington and I think it’s a big concern,” the CEO said. “We’re going to see some markets go up as much as 100%.”
Bertolini’s prediction is at odds with Congressional Budget Office estimates that the law will have little effect on small and large-employer plans and the Obama administration’s projections that middle-class families will actually save money. The 2010 law is expected to extend health care to about 30 million people who otherwise couldn’t get insurance, paid for by new taxes and fees on companies and wealthier individuals.
Those taxes will make coverage more expensive for insurers, as will other provisions such as a ban on discriminating against people with pre-existing medical conditions, Bertolini said. Premiums are likely to increase 25% to 50% on average in the small-group and individual markets, he said, citing projections by his Hartford, Conn.-based company.
High estimate
The one-time jump in rates also includes increases in costs that would come even without the law, Bertolini said.
“That just seems silly,” said Gary Claxton, a vice president at Kaiser Family Foundation, a Menlo Park, Calif.-based nonprofit that studies health issues. “I can’t imagine anything going on in the small-group market that would change the average premium that much. On the individual market, there’s arguments for things changing, but those magnitudes seem high.”
The Obama administration said last year that “middle-class families” buying insurance through the law’s new online exchanges may save as much as $2,300 a year starting in 2014. Nick Papas, a White House spokesman, declined to comment on Bertolini’s predictions.
The CBO estimated in 2009 that the law will increase premiums 10% to 13% for individuals and have little effect on small- and large-employer plans. After the subsidies are factored in, individual bills will go down by about 60%, the agency predicted.
About 43% of people who buy on the exchanges, or individual markets outside of them, won’t be eligible for subsidies, according to the report. They would see premium increases “somewhat less” than 10% to 13%, CBO predicted.
To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net
To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.
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9 Comments
Posted by: PACTWDM | December 14, 2012 8:25 AM
I wonder if congress had not exempted themselves from this program and they were not guaranteed their healthcare through our tax dollar if they would have signed onto this?! It is sad that they area allowed to make decisions that affect millions of people and could effect the lives of thousands of brokers in this country and yet exempt themselves from the laws they pass. Guard you wallets folks. I wonder if I can annex my house and start my own country??
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Posted by: kathy23 | December 13, 2012 10:35 PM
No, Terry, it absolutely will not work. System can't have more people "offered" insurance with very little penalty for not purchasing -until they are sick (adverse selection), increased medicaid levels with short termed funding to states, less carriers in the playing field, and to boot... the government is supposed to be MORE efficient in the delivery than the private sector? Since when has the government run ANYTHING CHEAPER than the private sector. I predict MORE people will be uninsured, there will be more people with hours reduced to below the 30 hour threshold by employers in order to avoid the penalty for full time employees, and those good folks that TRY to do the right thing and pay their monthly premiums will pay a ridiculously high rate because the pool of SELF PAYING people will be much lower. It will create a dead beat system of only buying the insurance when you are sick and more people on government assistance. It is all smoke and mirrors and pre-designed to fail.
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Posted by: kathy23 | December 13, 2012 10:33 PM
No, Terry, it absolutely will not work. System can't have more people "offered" insurance with very little penalty for not purchasing -until they are sick (adverse selection), increased medicaid levels with short termed funding to states, less carriers in the playing field, and to boot... the government is supposed to be MORE efficient in the delivery than the private sector? Since when has the government run ANYTHING CHEAPER than the private sector. I predict MORE people will be uninsured, there will be more people with hours reduced to below the 30 hour threshold by employers in order to avoid the penalty for full time employees, and those good folks that TRY to do the right thing and pay their monthly premiums will pay a ridiculously high rate because the pool of SELF PAYING people will be much lower. It will create a dead beat system of only buying the insurance when you are sick and more people on government assistance. It is all smoke and mirrors and pre-designed to fail.
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Posted by: G W | December 13, 2012 8:09 PM
So, how does the increase in enrollees (the projected 30 million new people buying health insurance) impact or offset the cost of the premiums? I thought that the larger a pool is, the more people to spread the risk around, will minimize large increases in premiums. I thought the theory of insurance (i.e., spreading the risk) still exists. Where does that fit with the CEO's strategy for underwriting?
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Posted by: BillM | December 13, 2012 3:59 PM
This is simply another vehicle to get more people to depend upon the government instead of themselves. Keeps the "ruling" party in power.
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Posted by: cityblues | December 13, 2012 3:11 PM
Don't forget, prior to passage, BCBS and Humana studies showed about a 300% increase in premium; however, the administration quickly shut those voices down. I think we'll see these studies bear fruit and substantial increases will be the norm when PPACA is fully implemented and beginning in 2014. In my opinion, the law is geared to eventually direct everyone to government plans; but, not the rich plans that Congress and the Senate enjoy. The CBO uses the so-called fuzzy math for their predictions; e.g. the numbers they illustrated prior to passage. Anyone who buys the CBO's predictions are disregarding the wool pulled over their eyes. I think Gary Claxton (the Kaiser Family Foundation) is disingenuous when making the statements in this article, as much so as the Obama administration. White House spokesman Nick Papas doesn't comment because the White House doesn't want to admit the truth to the American public. But, that's politics for you. And that is my opinion.
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Posted by: WonderR | December 13, 2012 1:47 PM
Sounds like Aetna doesn't like ACA, or competition?
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Posted by: BenefitsGuyinCT | December 13, 2012 1:38 PM
While big focus is on cost of plans, still not hearing solutions to address why utilization is high in the first place. Obesity and chronic diseases cost more. Shift our culture to a preventive/health model for the long term. Also, when health care reform was being developed, White House invited leads of insurance companies to provide input (including Aetna). Why are they now pointing fingers? Seemed like they were part of the process to begin with.
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Posted by: Terry T | December 13, 2012 1:37 PM
So, we will be able to insure 30 million more people and 57% of the people with health insurance will receive some sort of subsidy for their insurance and it will all be funded by a 10-13% premium rate increase. I wonder if that can really work?
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