As health insurers prepare to submit 2014 premium rates to state regulators next month, some stakeholders are questioning whether the Patient Protection and Affordable Care Act will be affordable after all.
The worry is that some of the mandates in the law could drive up the cost of coverage so much that many consumers may choose to pay a penalty for failing to get coverage rather than pay steep insurance premiums.
“We're focused like a laser on affordability,” American's Health Insurance Plans CEO Karen Ignagni told Modern Healthcare in an interview. AHIP has been arguing for months that premiums will rise because of a new premium tax, essential health benefits required of individual and small-group plans, and a narrower age-band ratio for rates. The new ratio means that an older individual will pay no more than three times more in premiums for the same plan. As a result, younger people will end up paying more for coverage in 2014 than today. Now, most states have a 5:1 age-band ratio.
Some of Ignagni's concerns were highlighted in a study released Tuesday by the Society of Actuaries. The actuaries found that the cost of medical claims, one of the key factors driving insurance premiums, will rise an average of 32% nationwide by 2017 as a result of an expected change in the individual market composition. The study further predicts that as many as 43 states could see claims costs increase by percentages in the double digits.