Health care overhaul

Insurers warn of health insurance price hikes

The Associated PressMarch 13, 2013 

  • Changing insurance rates A shake-up in insurance rates is expected in January when the new health care law kicks in. Here is a sampling of factors that can spur changes:

    Age. In many states, insurers charge a 60-year-old customer $5 in premiums for every $1 they collect from a 24-year-old because, in general, older people use health care more. But the overhaul will narrow that ratio to 3-to-1, causing rates for a 24-year-old who pays $1,200 annually to jump to $1,800 while a 60-year-old who pays $6,000 will see a 10 percent drop.

    Gender. The law will prohibit insurers from setting different rates based on gender – something they currently do because women generally use more health care so premiums for some men could rise, while they fall for women.

    Current coverage. Many policies on the individual market (coverage not sold through employers) exclude maternity coverage, but that will be considered an essential health benefit under the overhaul, boosting rates for some.

    Chronic conditions. The law will require insurers to cover everyone who applies so costs could fall dramatically for people who have been unable to find reasonable coverage due to a chronic condition like diabetes or high blood pressure.

Some Americans could see their insurance bills double next year as the health care overhaul law expands coverage to millions of people.

The nation’s big health insurers say they expect premiums – or the cost for insurance coverage – to rise from 20 percent to 100 percent for millions of people due to changes that will occur when key provisions of the Affordable Care Act roll out in January 2014.

Mark Bertolini, CEO of Aetna Inc., one of the nation’s largest insurers, calls the price hikes “premium rate shock.”

“We’ve done all the math, we’ve shared it with all the regulators, we’ve shared it with all the people in Washington that need to see it, and I think it’s a big concern,” Bertolini said during the company’s annual meeting with investors in December.

To be sure, there will be no across-the-board rate hikes for everyone, and there’s no reliable national data on how many people could see increases. But the biggest price hikes are expected to hit a group that represents a relatively small slice of the insured population. That includes some of the roughly 14 million people who buy their own insurance as opposed to being covered under employer-sponsored plans, and to a lesser extent, some employees of smaller companies.

The price increases are a downside of President Barack Obama’s health care law, which is expected to expand coverage to nearly 30 million uninsured people. The massive law calls for a number of changes that could cause premiums for people who don’t have coverage through a big employer to rise next year – at a time when health care costs already are expected to grow by 5 percent or more:

•  Changes to how insurers set premiums according to age and gender could cause some premiums to rise as much as 50 percent, according to America’s Health Insurance Plans, or AHIP, an industry trade group that’s funded by insurers.

•  A new tax on premiums could raise prices as much as 2.3 percent in 2014 and more in subsequent years, according to a study commissioned by AHIP. Policyholders with plans that end in 2014 probably have already seen an impact from this.

Requirements that insurance plans in many cases cover more health care or pay a greater share of a patient’s bill than they do now also could add to premiums, depending on the extent of a person’s current coverage, according AHIP.

The Obama administration says the law balances added costs in several ways, including tax credits that will bring down what many consumers will pay for insurance.

“The health care law will bring down costs and save money for young people and families,” said Erin Shields Britt, a spokeswoman for the Department of Health and Human Services. “It’s misleading to look at one provision of the law alone. Taken together, the law will reduce costs.”

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