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Healthcare Business News

Medical costs, not ACA, blamed most for big insurance hikes so far

By Paul Demko
Posted: December 19, 2013 - 12:01 am ET

Roughly half of the health plans that filed for premium increases of 10% or more from July 2012 to June 2013 put some of the blame on the Patient Protection and Affordable Care Act. But the vast majority of the hikes were attributed to medical costs and other routine factors, according to a new report by the Commonwealth Fund.

“Overall, the Affordable Care Act's benefit mandates and insurer fees had only a minor effect on insurers' larger rate increases prior to 2014,” concluded the report, authored by healthcare scholars Michael McCue, of Virginia Commonwealth University, and Mark Hall, of Wake Forest University.

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However, the study looked at rate hikes before the implementation of two key provisions of the federal healthcare law. Starting next year, insurers will have to offer coverage to anyone who wants it and won't be allowed to base pricing on health status.

Under the healthcare reform law, insurers are required to provide a written justification for premium increases of 10% or more for products in the individual and small-group markets that were not grandfathered when the law was passed in 2010.

McCue and Hall scrutinized 310 rate filings in 2012 and 2013 that met this threshold. Of these, 155 blamed some portion of the increase on the ACA. The percentage of plans ascribing part of the rate hike to the federal law was higher in the small group market (62%) than in the individual market (39%).

But the portion attributed to Obamacare was generally small. For example, 94 plans attributed part of the rate hike to new coverage requirements for services such as contraceptive products and sexually transmitted disease screening. But of the 65 plans that specified what part of the rate hike could be attributed to this change, the median increase was less than 1%.

In addition, a significant number of insurers blamed new taxes and fees that are part of the federal healthcare law for rate hikes. For plans that took effect in 2013, 29% said they needed to charge higher premiums in part because of such levies. The median increase in premiums attributed to these new taxes and fees was 1.5%.

The authors concluded that most of the increases were attributable to routine factors in the insurance marketplace. “Many unhappy things in life are inevitable: death, taxes and increasing health insurance rates,” they wrote.

Follow Paul Demko on Twitter: @MHpdemko

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