On Tuesday, the Associated Press (AP) published an article recounting a Society of Actuaries (SOA) study that finds health insurance premiums “will jump an average 32 percent for Americans’ individual policies under President Obama’s overhaul.” That titillating claim formed the basis of multiple news agencies’ headlines Wednesday morning, including NBC News, Fox News, and U.S. News and World. But as several other analyses show — and the report’s own authors admit — these assertions are based on an extremely narrow interpretation of the health care law that assumes rising costs in perpetuity while ignoring its very real cost-cutting measures.

In essence, SOA argues that Obamacare provisions extending health coverage to all Americans regardless of their pre-existing medical conditions will dramatically raise costs in the individual insurance market — especially since sicker, older Americans will have guaranteed access to insurance and cannot be charged more than three times the premiums of younger people. The Society’s projections are quite dramatic, finding that premium rate increases by 2017 “would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland.”

Corporate insurance giants have used many of these same arguments to dishonestly justify double-digit rate hikes on their customers, despite soaring profits. But these claims are founded on a baseline that assumes current health care cost trends to be set in stone, and ignore — even by the SOA’s own admission — almost all of Obamacare’s most important consumer protections and market regulations aimed at lowering overall costs. Rick Foster, a retired Medicare actuary, admitted that, although the study’s projections are consistent with certain health care trends, they don’t necessarily reflect the bigger picture:

“Having said that,” Foster added, “actuaries tend to be financially conservative, so the various assumptions might be more inclined to consider what might go wrong than to anticipate that everything will work beautifully.” Actuaries use statistics and economic theory to make long-range cost projections for insurance and pension programs sponsored by businesses and government. [...]

Kristi Bohn, an actuary who worked on the study, acknowledged it did not attempt to estimate the effect of subsidies, insurer competition and other factors that could mitigate cost increases. She said the goal was to look at the underlying cost of medical care.

In fact, more comprehensive studies of the health reform law that incorporate all of its provisions — rather than just the potentially negative ones — have found that “[m]ost young adults and families will be largely shielded from the full effects of the narrower age rating bands thanks to the ACA’s increased eligibility for Medicaid and tax credits offered through state health insurance exchanges or through access to employer-sponsored insurance,” and that Americans between the ages of 21 and 27 purchasing insurance through the individual market “will be protected by Medicaid/CHIP or exchange-based subsidies under reform.”
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With Obamacare on the pathway towards full implementation, critics have attempted to point out every perceived flaw in the health reform law to marshal public opinion against it. Recently, reform opponents have focused their sights on the rule that prevents insurers from charging seniors more than three times the premiums they charge younger Americans, claiming it will cause young people’s health premiums to skyrocket.

That provision is actually meant to protect seniors, who are costlier to cover, from excessive price gouging. But health reform critics point out that insurance companies may try to exploit the rule to raise prices for younger Americans, making these young people’s health coverage unaffordable. According to a new Urban Institute analysis, however, these allegations are rooted more in wishful thinking than policy reality.

According to the Urban Institute’s findings, the 3:1 premium ratio will have little effect on younger Americans, as “they will be eligible for either Medicaid or tax credits through state health insurance exchanges.” The study goes on to conclude that through a combination of elevated Medicaid/CHIP benefits, Obamacare’s provision allowing adults up to 26 years of age to stay on their parents’ insurance, and the health reform law’s private insurance subsidies for Americans living up to 400 percent of the federal poverty level (FPL), younger Americans will not experience the sort of “sticker shock” that the doomsayers have been foretelling:

Most young adults and families will be largely shielded from the full effects of the narrower age rating bands thanks to the ACA’s increased eligibility for Medicaid and tax credits offered through state health insurance exchanges or through access to employer-sponsored insurance. In fact, this is largely true across age groups. Eighty-five percent of policies sold through nongroup exchanges will be to those with incomes at or below 400 percent of federal poverty level (FPL), making them eligible for tax credits.

Looking specifically at young adults age 21–27 purchasing nongroup insurance today, two-thirds will be protected by Medicaid/CHIP or exchange-based subsidies under reform; two-thirds of the remainder are under age 26 and in homes where their parents have employer-based coverage for which they are eligible under the ACA’s dependent coverage provisions.

The study’s findings emphasize both the importance of states taking part in Obamacare’s optional Medicaid expansion and the tendency for Obamacare critics to portray the law as some sort of fiscal bogeyman. Even the media has been complicit in smearing the law, implicitly suggesting that some insurers’ plans to institute double-digit premium hikes are in anticipation of Obamacare’s expansive coverage requirements — they are not. The new Urban Institute analysis is yet further proof that there is a considerable gap between the rhetoric and the reality when it comes to Obamacare.

The quest to improve patient care, maximize medical efficiency, and curb wasteful spending by digitizing Americans’ patient records, insurers’ claims, and providers’ treatment requests just gained a powerful new ally: “Watson,” IBM’s revolutionary data-mining supercomputer that made national waves when it defeated reigning Jeopardy! champion Ken Jennings at his own game.

American Medical News reports that health insurance giant WellPoint has struck up a deal with IBM and Memorial Sloan-Kettering Cancer Center in New York to use the supercomputer — which has spent its post-Jeopardy days amassing and “learning” massive amounts of data about the American health care, insurance, and public health industries — for two pioneer programs to automatically process, review, and pre-authorize medical claims and treatment requests, as well as a third program dubbed “Interactive Care Insights for Oncology” that will “identify individualized treatment options for cancer patients, starting with lung cancer” in order to advise oncologists on the latest and most effective treatment regimens by incorporating up-to-the minute longitudinal medical studies and cancer data into its suggestions.

In an email to ThinkProgress, Cindy Wakefield, a Regional Director for Public Relations at WellPoint, pointed out that the new technology has the potential to have a big impact on the health care industry. “We believe the IBM Watson technology can improve the efficiency and quality of treatment, potentially eliminating unnecessary testing, enhancing the consistency of actions, and accelerating the time to treatment via expedited decision-making processing,” Wakefield explained. “We are continuing to train Watson, and we are teaching Watson by ‘feeding’ it information such as our medical policies and clinical guidelines.”

Using Watson’s technology to automate claims processes could be a potent catalyst for a more efficient American health care industry — which is often bogged down by poor inter-provider communication, incomplete and non-centralized data, and archaic paper records. The supercomputer could also advise providers on the most efficient and appropriate use of treatments based on each individual medical claim, patients’ specific insurance benefits, and patients’ medical histories by analyzing health care data from across the country.

Interestingly, if Watson concludes that a physician or provider’s treatment request is not the most effective one based on a patient’s history and medical benefits, the computer can register its disagreement — but as Wakefield explained to ThinkProgress, it cannot override the provider’s decision or deny treatment requests. Instead, a human nurse would have to review Watson’s alternative suggestion, and then make a judgment call along with the provider on whether or not to comply with it.

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Two separate reports by the Centers for Medicare and Medicaid Services (CMS) and Health Affairs builds upon earlier research to conclude that private insurance plans under the Medicare Advantage program drive up Medicare spending. Ultimately, those private plans raise health care costs by encouraging seniors to cherry pick their health plans respective to their health, Kaiser Health News reports.

Private insurance plans under Medicare Advantage are often able to attract healthier Medicare beneficiaries by offering cheap — but bare-bones — health plans. When those healthier seniors encounter a medical problem that’s too extensive for their private coverage, they switch over to the more generous traditional Medicare program in order to take advantage of its more expansive benefits. That in turn, raises spending in the traditional Medicare pool:

A study released Thursday, by Gerald Riley, a researcher at the Centers for Medicare & Medicaid Services (CMS), adds to those concerns. The study looked at more than 240,000 people who dropped out of Medicare Advantage plans in 2007, and compared them with beneficiaries who remained in traditional Medicare the entire time. In the six months after leaving the private plans, the former Medicare Advantage patients used an average of $1,021 in medical services each month, while the patients in the control group cost Medicare $710 a month, the study found.

Another study in the December issue of the journal Health Affairs found that people “disenrolling were much more likely than other beneficiaries to report health declines.” Those researchers, led by J. Michael McWilliams, a Harvard Medical School professor, surmised that beneficiaries who developed serious ailments might leave the plans to get unfettered access to physicians and treatments through traditional Medicare, but neither that study nor Riley’s determined what motivated the changes. [...]

McWilliams’ study, along with other analyses in the same issue of Health Affairs, found that generally, Medicare has succeeded in reducing cherry-picking by Medicare Advantage plans by changes in how the program worked, including restrictions in the time periods that people could switch from a private plan back to traditional Medicare. In 2006, Medicare tried to crack down on switches by limiting them to once a year rather than monthly.

While the Health Affairs study notes that there have been some protective measures instituted to prevent this cherry-picking, it still occurs in considerable volume. The findings underscore the reality that adverse selection remains a costly problem in private insurance markets.

While some critics might claim that reductions to Medicare Advantage payments under Obamacare could encourage seniors to continue disenrolling from private Medicare Advantage plans, that hasn’t borne out in reality. In fact, since Obamacare’s cuts to overpayments in Medicare Advantage began to be phased in, enrollment in the program is up while premiums are down.

Furthermore, increased enrollment into traditional Medicare might actually be a desirable outcome — the traditional Medicare program costs less per capita than the private Advantage program. And as these recent studies show, Advantage plans tend to fall short — and cost more — once beneficiaries get sick. As Center for Medicare Advocacy executive director Judith Stein put it, “Private Medicare Advantage plans work for people when they are relatively well, but fall short of traditional Medicare when they are sick or disabled.”

Underscoring the complexity of protecting consumers in an age of accelerating technological innovation, NPR reports that some insurance companies specializing in life insurance and long-term care can choose to discriminate against Americans based on their genetic makeup — and the companies could even subject prospective customers to genetic testing.

Thanks to the 2007 Genetic Information Nondiscrimination Act (GINA) successfully championed by Rep. Louise Slaughter (D-NY), health insurers cannot use a patient’s genetic information in order to hike their premium rates or curb benefits. “There were countless people in this country who were not eligible for insurance at all, simply by the way they were born,” Slaughter told NPR.

But GINA does not extend to the types of supplemental insurance that Americans predisposed to genetically-linked, degenerative diseases like Parkinson’s or Alzheimer’s are likely to purchase, leaving consumers’ premiums susceptible to their genome and pushing essential long-term care costs onto patients:

“GINA was a fabulous accomplishment,” says Robert Green, a researcher in the genetics department at Harvard Medical School. “It was long in coming and much needed. But I think that it was not perfect.”

Green oversaw a study that examined how people react after they learn they have ApoE4, a gene associated with Alzheimer’s. He found that people who discover they have the gene are five times more likely than the average person to go out and buy long-term-care insurance.[...]

Green says it’s especially ironic that GINA does not apply to long-term-care insurance policies, since they cover the costs of nursing homes, assisted living facilities, home health aides and other things that people with Alzheimer’s disease often need to use.

Long-term care insurers assert that not being able to incorporate information about consumers’ genetic dispositions into their premium rates would make their businesses unsustainable. It’s true that Americans who need long-term care are almost certain to be sicker and, therefore more costly to their insurance companies, than those with standard health coverage. But on the other hand, the services covered under such insurance plans — such as home assistance and health aides — are far more rudimentary than the complex and specialized medical treatments covered under standard insurance, so permanently charging Americans higher premiums because of their genetics ends up being excessive and discriminatory.

Other than extending GINA protections to long-term care and life insurance, lawmakers could also address the disparity by requiring health insurance plans to have more long-term care options, perhaps by making such care an “essential health benefit” under Obamacare.

And the issue of human genetics is likely to remain at the forefront of policy debates for the foreseeable future. The Supreme Court is already slated to hear a case on whether or not corporations can patent the detection of certain cancer-causing genes.

Anthem Blue Cross, California’s largest for-profit health insurance company, is under fire for potentially targeting HIV-positive patients with its new prescription drug policy. Blue Cross is no longer allowing patients to pick up their HIV medications at a pharmacy, requiring them to instead go through a mail-order system — even though the policy hasn’t changed for people with other chronic conditions, like diabetes.

A consumer advocacy group has filed suit against the insurance company on behalf of an HIV-positive San Diego man, going by the pseudonym Jon Jones, who says he has incurred hundreds of dollars in out-of-pocket expenses now that he is no longer able to get his medications from his regular pharmacy. Jones asked Anthem Blue Cross for an exception to their new policy, but they refused — and now his lawyers are asking for an injunction to block the change:

Consumer Watchdog claims the change in programs is discriminatory under state civil rights law and potentially devastating for HIV/AIDS patients, many of whom rely on their local pharmacist to monitor potentially life-threatening adverse drug reactions.

According to the lawsuit, Blue Cross’ change will also cause consumers to lose access to drug discounts available only at retail pharmacies.

In addition to the serious health consequences of the program, patients’ fundamental right to privacy is also threatened because HIV/AIDS medications will be delivered to homes and businesses, according to the complaint.

Blue Cross says that any patients who feel the new requirement is causing them hardship may request an exception, although it’s unclear why Jones didn’t qualify for that.

Fortunately, Obamacare could help ensure that HIV positive individuals receive the best possible care from insurance companies. When the health reform law is fully implemented in 2014, insurers will no longer be able to treat HIV like a pre-existing condition and deny Americans coverage simply for having the virus. The health law will also eliminate lifetime caps on coverage, so HIV-positive individuals will be able to afford the care they need without reaching an arbitrary cut-off set by their insurance companies.

Small businesses and individual health policy holders could face dramatic premium spikes this year, as some insurers file double digit increases and attribute the changes to the Affordable Care Act. The sticker shock is mostly the result of rising health care costs — and the prevalence of sicker beneficiaries in health insurance risk pools. The media, however, is blaming health care reform.

For instance, Friday’s Politico reported that premiums are increasing across the country as “All those new consumer benefits packed into the health reform law — birth control without a co-pay, free preventive care and limits on when insurers can turn down a customer — had to be paid for somehow.” Policy holders may experience 10 to 20 percent rate hikes, it warns, as insurers are “working the health reform law’s 2014 fees into their 2013 bills.”

So how much is Obamacare responsible for? Five, maybe eight percent? The answer is less than two.

Insurers are arguing that the costs of Obamacare’s annual fee on the industry, its requirement that companies contribute to a reinsurance program, and new benefits and regulations have to be passed down to consumers. “There’s a massive new health insurance tax that starts in 2014,” Robert Zirkelbach, the spokesman for America’s Health Insurance Plans told Politico. “For policies that are sold in 2013 and extend into next year, there’s going to be taxes imposed. … As a result, like all taxes, they will be reflected in premiums charged.”

There are new costs in 2014, but they have little to do with reform. Consider the insurers’ own rate justification filings, in which companies have to substantiate the raises. Aetna in Pennsylvania, for instance, seeks to increase rates by an average of 16.49 percent, but as it explains in its filing, 63.18 percent of the increase is attributed to the “cost of providing healthcare services to policyholders.” The Affordable Care Act is responsible for a tiny portion of the increase:

Impact of New Taxes and Fees

The Affordable Care Act (ACA) includes several new taxes and fees payable in 2014, including two that specifically apply to insured products — the health insurer fee and the reinsurance contribution. These new fees result in additional costs and are reflected in our updated rates for policies that extend into 2014. The overall impact of these costs on this filing is as follows:
* Health Insurer Fee: 1.0%
* Reinsurance Contribution: 0.5%

Washington & Lee Law School professor Timothy Jost predicted that “insurers in the individual market will benefit substantially from reinsurance payments” and will be “spared some administrative costs-notably the cost of underwriting which should be quite substantial.” ” The cost of new benefits should not be a big deal,” he continued, since “most of the costs of health insurance are for inpatient, outpatient, physician, lab, radiology, and pharmaceuticals, which virtually all insurers now cover.”

“I suspect that what is going on is a combination of legitimate concern about new costs, overestimation of what those costs will be and underestimation of offsetting savings, taking a chance to attack the ACA, and grabbing the opportunity to make some profit,” Jost added.
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Many Obamacare provisions are intended to protect Americans from the private insurance industry, such as measures to prevent insurers from denying coverage to Americans with pre-existing conditions and to keep rising insurance premium rates in check. Nevertheless, as the New York Times reports, some of America’s largest insurers are exploiting a lack of stringent oversight in Obamacare to hike their premiums by double-digits anyway.

Insurers like Aetna and Anthem Blue Cross are requesting rate hikes as steep as 26 percent — amounting to hundreds of dollars that Americans will be forced to pay in higher premiums every month — in states such as California and Florida, and there is little that states can currently do to stop them:

Critics, like Dave Jones, the California insurance commissioner and one of two health plan regulators in that state, said that without a federal provision giving all regulators the ability to deny excessive rate increases, some insurance companies can raise rates as much as they did before the law was enacted.

“This is business as usual,” Mr. Jones said. “It’s a huge loophole in the Affordable Care Act,” he said.

While Mr. Jones has not yet weighed in on the insurers’ most recent requests, he is pushing for a state law that will give him that authority. Without legislative action, the state can only question the basis for the high rates, sometimes resulting in the insurer withdrawing or modifying the proposed rate increase.

While Obamacare does require state regulators to review any rate increase request above 10 percent, it does not endow those regulators with any meaningful veto power. Such rate-setting policies are left to states’ discretion, and although 37 states may currently negotiate or reject insurers’ desired hikes, some states with large markets — such as California — do not have this ability.

Large insurers claim that the hikes are necessary in order to keep up with general medical inflation. But since medical inflation has actually been relatively low in recent years, this claim falls flat. Insurers may actually be raising their rates in an attempt to counteract other Obamacare consumer protection measures such as the “80/20 rule” that requires insurance companies to spend at least 80 percent of the premiums they charge on actual care rather than their profits or overhead. In 2014, Obamacare will also end the practice of medical “underwriting” — taking a consumer’s current health into consideration when setting his or her premium rates — so insurance companies may be trying to lock in higher rates on sicker Americans while they still can.

Fortunately, the 80/20 rule — which has already put over $1.5 billion in insurance rebates back in consumers’ pockets — will help ensure that Americans are refunded some of their money if the latest round of rate hikes are excessive. But the only way to ensure that Americans are not held hostage to the whims of private insurers is to expand state regulators’ ability to negotiate and control premium rates.

And lawmakers are quite aware of the discrepancy. Three years ago, Sen. Dianne Feinstein (D-CA) introduced the Health Insurance Rate Authority Act of 2010 in an effort to give regulators more control over insurance rate hikes, but the bill died in committee. President Obama has also called for greater federal oversight of insurance rates.

3,000 former football players suffering from various ailments that they claim are a consequence of head trauma suffered while playing the sport professionally have been locked in a titanic lawsuit against the National Football League (NFL), asserting that the league underplayed the risks associated with concussions and other head injuries.

But beyond highlighting the potential dangers stemming from football-related head trauma, the New York Times reports that the litigation may have far-reaching implications for contact sports leagues across America and the insurance companies that do business with them.

At issue is how much liability the 32 insurers associated with the NFL have when it comes to paying legal fees stemming from the litigation — and how much in claims they may have to pay out if the former players win their case. While a mammoth corporation like the NFL can bear that financial burden, high schools and smaller contact sports organizations don’t share in that luxury, and fear of litigation could lead to a race to the bottom in which insurers hike up their prices for contact sports coverage — or stop covering head injuries altogether:

“Insurers will be tightening up their own coverage and make sports more expensive,” said Robert Boland, who teaches sports law at New York University. “It could make the sustainability of certain sports a real issue.” [...]

Fearful of future lawsuits, insurers may start raising premiums or excluding concussions and other injuries from their policies not just for the N.F.L., but also for hockey and lacrosse and other contact sports. As information about the link between head trauma and long-term injuries has grown, coaches, athletic directors and others will have a harder time claiming they did not know of the connection if they are named in lawsuits.

“A common misconception is that no one’s going to sue their youth league or nonprofit, but that’s not the case,” said Dan Pullen, who runs an insurance brokerage in Fort Worth that specializes in policies for teams, players and leagues. “Maybe the league isn’t negligent, but there might be $50,000 in legal claims” for a lawyer to chase.

The obvious solution would be enacting more rigorous protections for those who play high-contact sports, as well as setting higher accountability standards for sports organizations themselves. This would help spread out some of the risk that insurers bear when they cover players. But the fear and motivation induced by dollar signs could make such collaborative efforts difficult to achieve. Discontinued coverage for sport-related injuries would be the worst possible consequence of the litigation by far.

As the serious long-term ramifications of football injuries have come under increased scrutiny in recent years, there have been some attempts to promote player safety in the NFL. Over the next two seasons, the entire league will begin monitoring players’ head injuries with high-tech electronic medical records — a policy that was actually enacted as a condition of the most recent collective bargaining arrangement negotiated between current players and the NFL. The future of American contact sports might depend on continued cooperative efforts like that.

A new report from the Commonwealth Foundation finds that Obamacare’s “medical loss ratio” provision — the so-called “80/20 rule” requiring insurers to spend at least 80 percent of every Americans’ premium costs on patient care, rather than on their own profits or overhead — has resulted in a total of $1.5 billion overhead savings and insurance rebates to Americans since its implementation in 2011.

As a press release from the Commonwealth Fund explains, those rebates mostly went to individual policyholders, who are now paying lower premiums since the requirement has forced insurers to reduce their overhead costs and profit margins:

The authors find that in the individual insurance market, improvements were widespread: 39 states saw administrative costs drop, 37 states saw medical loss ratios improve, and 34 states saw reductions in operating profits. Some states stood out for significant improvements. In New Mexico, Missouri, West Virginia, Texas, and South Carolina, medical loss ratios improved 10 percentage points or more, while administrative costs dropped $99 or more per member in Delaware, Ohio, Louisiana, South Carolina, and New York. [...]

The authors note that while insurers in the individual market have a less stringent medical loss ratio requirement—80 percent, as opposed to 85 percent in the large-group market—their traditionally higher overhead costs and lower medical loss ratios mean they have to work harder to reach the new standard. As a result, these insurers lowered both administrative costs and profit margins, therefore reducing growth in premiums.

While small- and large-group plan holders did not enjoy rebates to the same extent as their individual policy-holding counterparts, these larger plan providers still successfully lowered their overhead costs. And the study only addresses savings stemming from current policyholders over the course of the last year. As Obamacare is fully implemented in 2014 and states set up insurance exchanges where Americans may purchase individual coverage, an increasing number of people will benefit from the savings resulting from the 80/20 rule.

The Commonwealth study’s findings confirm earlier predictions about the cost-saving effect that Obamacare’s medical loss ratio provision would have on American consumers.