[Anecdotes] Affordable Care Act provides benefits for small price tag

 

I recently came across a chart from @NatHarward and forwarded along by @AHIPCoverage regarding the increase in insurance premiums expected as a result of the recent health reform law. Although we typically do not report on studies that are not peer-reviewed, I found the chart intriguing. Although initially skeptical, I find the research conducted by consulting firm AON Hewitt convincing and worthy of mention.

As reported in their 2011 Health Insurance Trend Driver Survey, the goal of their survey was to “provide a close examination of the factors that are driving the increase in health care costs.” Of these factors, some are the natural trends (“core trends”) causing increases in beneficiaries’ premiums. But of particular interest are premium increases attributable to elements of the Affordable Care Act (notably: coverage of children until age 26, first-dollar coverage of preventive care screenings rated A or B by, and removal of pre-existing condition barriers for children)

“Core health care trend is the annual rate of change in the underlying cost and utilization of health care services, excluding the impact of benefit design changes (whether voluntary or required by legislation) and changes in the underlying makeup of the covered group.”

The study analyses data provided by 26 health plans covering 32 million lives. The interesting portion of the AON Hewitt analysis begins on page 19, where estimates for compliance with the Affordable Care Act (ACA) are summarized. The ACA affects the individual far more than the ; the major contributors to this impact are elimination of pre-existing conditions for children and the coverage for preventive care .

Overall, the net impact averages out to be +1.5 percent in premium costs. However, the numbers differ largely by insurance product line. Large and small group plans are projected to see only minor increases: 0.8 percent and 1.5 percent increases, respectively. The bulk of the impact is on the individual market where medical underwriting and exclusionary policies had been permissible for health plans in the past.

The individual insurance market premiums increase 4.7 percent due to the Affordable Care Act. The figure by AHIP breaks down the projected increases into core trend and ACA related. The largest driver of premium increases are due to the core trend. However, the consumer benefits resulting from the ACA add 8 percent of the cost increases in the large group market, 13 percent in the small group market, and a staggering 26 percent in the individual market. The cost data from the AON Hewitt analysis appears consistent with other research. Kaiser Family Foundation CEO Drew Altman, commenting on his firm’s annual health benefits survey, has said the Affordable Care Act “could have been responsible for about one-and-a-half percentage points – we say 1 to 2 percentage points – of the increase that we’re documenting this year [2011].”

Why? Simply put, the ACA enriches the benefits of traditionally meager insurance plans. According to the Kaiser Family Foundation, 2.3 million adult children obtained insurance and 31 percent of firms adjusted their preventive health offerings as a result of the Affordable Care Act. Political pundits may view the facts in different lights, but despite minor cost growth in premiums consumers are reaping benefits.