The Department of Health and Human Services said Thursday that the Affordable Care Act saved consumers of health insurance at least $1.2 billion in premiums last year.
With all the recent discussions of increasing rates, that statement may sound counter-intuitive, but what must be remembered is the pages and pages that make up the health care reform contain many provisions. Next year, once the health insurance policies purchased on the exchanges begin, the degree to which premiums increase for currently-insured Americans will depend on a variety of factors: the age of the individual, income, family size, market competition, and state of residence. In general, exchange premiums will also reflect insurers’ estimates of the cost of offering new benefits to people and providing benefits to those who have never had insurance or have not been covered for a long time.
The savings to which the Department of Health and Human Services, HHS, referred is due to a different provision of Obamacare that has already been implemented. The healthcare law provided $250 million in grants to help states improve their review of insurers’ rates, and it gave the federal government the ability to review premium increases requests by insurers that are potentially unreasonable. “By regulation, HHS has defined requested rate increases of 10 percent or more as the threshold triggering greater scrutiny,” explained the 16-page report. Those reviews were the reason consumers saved “approximately $1.2 billion on their premiums when compared to the amount initially requested by insurers.” Insurers requested an 8.1 increase for individual market policyholders in 39 states during 2012, but the department stopped the increase at 7.1 percent, saving $311 million. In the small-group market, HHS kept rate increases at an average of 4.7 percent rather than the 5.8 percent requested in 35 states, saving $866 million.