Committee Releases Report Citing Existing Analyses from the Nation’s Top Insurance Companies that Reveal Consumers Could Face Average Premium Increases of Nearly 100 Percent, Up to 400 Percent
WASHINGTON, DC – The House Energy and Commerce Committee today released a report citing internal documents from the nation’s largest health insurance companies that reveal the health care law’s policies, mandates, taxes, and fees will cause major premium increases for consumers in the individual, small group and large group markets. As part of the committee’s ongoing efforts to educate the American people on the law’s impact, Energy and Commerce Committee Chairman Fred Upton (R-MI), Chairman Emeritus Joe Barton (R-TX), Vice Chairman Marsha Blackburn (R-TN), Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA), Health Subcommittee Chairman Joe Pitts (R-PA), and Vice Chairman of the Health and Oversight and Investigations Subcommittees Michael C. Burgess, M.D. (R-TX) requested existing analyses from 17 insurers on the law’s effects on insurance premiums on March 14, 2013.
The report states, “Affordability. It was a central premise – and promise – of the Patient Protection and Affordable Care Act (PPACA) when the law was debated in Congress throughout 2009 and signed into law on March 23, 2010. In his remarks that day, President Barack Obama stated: ‘This legislation will also lower costs for families and businesses…’ Over three years later, the White House continues to state that the PPACA will lower costs.
“The following report chronicles the massive premium increases awaiting Americans when full implementation of the PPACA occurs in eight months, definitively contradicting the promise that the law will lower costs. As this report demonstrates, consumers purchasing health insurance on the individual market may face premium increases of nearly 100 percent on average, with potential highs eclipsing 400 percent. Meanwhile, small businesses can expect average premium increases in the small group market of up to 50 percent, with potential highs over 100 percent.”
For more information on the report, click here.
Impact on Individual Market
The materials provided to the committee indicate that consumers who purchase insurance in the individual market after full implementation of the PPACA will be hit with substantial premium increases. One insurer noted that 45 states and the District of Columbia “will see significant premium increases.” One leading national insurer estimates the total average change due to the PPACA for new business in the individual market will be a 96 percent increase in premiums. Existing customers can expect an average increase of 73 percent.
As one insurer’s documents show, new participants in the individual market could see a premium increase of 413 percent when new requirements on age rating and required benefits are taken into account. The average yearly cost for a new customer in the individual market grows from $1,896 to $3,708 — a $1,812 cost increase.
Impact on Small Group Market
According to materials submitted by one insurer, small businesses in “nearly all states will see premium increases.” While these increases will not likely be as high as those in the individual market, the incentives provided in the law to assist small businesses by reducing costs may be inadequate. For example, one insurer that offers small group plans observed that “[t]he ACA’s small group health tax credit incentive program is temporary and very small.” To make matters worse, due to the administration’s inability to “meet tight deadlines,” the PPACA program “intended to provide affordable health insurance to small businesses and their employees” has been delayed. One analysis showed that purchasers of small group plans can expect premium increases of up to 50 percent.
Impact on Large Group Market
Most of the insurers contacted by the committee had not conducted an analysis on the PPACA’s effects on the large group market. One insurer that did, however, estimated a premium increase for the large group market at 20 percent to 25 percent. In addition to the new services and benefits insurers are required to provide and the new rating and operation rules they are required to follow, the PPACA contains a number of taxes and fees that will be passed on to the consumer, not only in the private market but also in government programs run through insurance companies like Medicare and Medicaid. Across the board, the taxes and fees will result in premium increases. In fact, one insurer provided a presentation titled, “ACA Tax Will Increase Premiums” that bluntly states “[c]onsumers may no longer be able to afford their primary insurance choice because of this tax inequity.”
The report concludes, “The internal documents provided by the insurance industry confirm many of the concerns voiced over PPACA: despite promises that the law will lower costs, the PPACA will in fact cause the premiums of many Americans to spike substantially. The broken promises are numerous, and the empirical data reveal that many Americans, from recent college graduates to older adults, will not be able to afford the law’s higher costs.”