CREDIT: AP Photo/J. David Ake
Rising medical costs — and not the Affordable Care Act — were responsible for the vast majority of double-digit rate increases in the individual and small-group health insurance markets between 2012 and 2013, according to a new study by the Commonwealth Fund.
Obamacare requires insurance companies seeking premium hikes of 10 percent or more to justify themselves to state and federal regulators. Between the summers of 2012 and 2013, individual insurance plans that asked for a double-digit rate increases raised premiums by an average of $648 (an overall 19 percent average rise) while small-group plans raised rates by $729 (an average 15 percent increase). Just between four and five percent of privately-insured Americans in the individual and small-group markets had these rate increases approved, although the numbers varied significantly between geographic regions.
Recent polling has found that Americans generally blame the health reform law for making their insurance plans more expensive. Most privately-insured Americans — including those with employer-sponsored insurance — believe that Obamacare has either already caused their premiums to go up, or will do so in the future.
But conforming to Obamacare requirements — such as by offering free preventive services and contraception for women — had little to do with the increases, according to the Commonwealth Fund. “The review found that only about half the filings… attributed any portion of rate increases to provisions of the Affordable Care Act that had gone into effect by 2013,” according to a press release from the organization. “Overall, those effects accounted for a small part of insurers’ increases.”
Insurers stated that providing no-cost birth control and preventive care for women was responsible, on average, for just 0.8 percent of the requested increases. Taxes and fees associated with the health law drove another 1.5 percent in premiums hikes, according to the rate filings.
By contrast, higher per unit costs for services in both the individual and small-group markets drove just under 60 percent of the requested increases; increased use of services accounted for between one-quarter and one-third of additional increases, while higher administrative costs also contributed to small-group rate hikes.
Researchers concluded by noting that certain other Obamacare provisions — including protections barring insurers from denying coverage to people with pre-existing conditions — may modestly raise premiums in the coming years. Beginning in 2014, insurance companies in the individual and small-group markets will have to justify all rate hikes, and not just for double-digit increase requests.