Whether health insurance rates under the Affordable Care Act will rise or fall is still a big unknown, as a recent congressional report made clear. Two large New Jersey insurers submitted widely divergent estimates for the future cost of insurance premiums -- one saying they could, another saying they could fall by up to 25 percent. In addition, one insurer said premiums for small businesses would rise by 16 percent.
The costs were provided to Congress with the proviso that the estimates would remain anonymous.
The situation won’t become clear until insurers propose details of their plans to state and federal regulators, which is expected to occur before the insurance exchange is up and running. The exchange is expected to launch on October 1, with residents eligible to purchase insurance starting January 1, 2014.
The estimates were raised during a wide-ranging healthcare summit hosted by the Common Sense Institute of New Jersey, a free-market-oriented think tank. The event included discussions of the insurance exchange and Medicaid, two key features of the ACA.
While it’s not clear what led to the wildly divergent prices. one company estimated that the combination of the individual mandate and subsidies would drive down premiums by $2,840 per year for a 60-year-old man, contributing to a 23 percent annual reduction. This estimate, however, is contingent on younger, healthier residents purchasing insurance and sharing in the risks and burdens of paying for care.
The other company worked with a different scenario, estimating instead that the overall cost of premiums would rise by 6 percent for a 60-year-old man.
There will be a backlash against higher premiums, according to Joel White, executive director for the Washington, D.C.-based, business-funded organization the Council for Affordable Health Coverage.
“It’s unclear to me whether that backlash is going to be turned against insurance companies, because like it or not people love to hate insurers -- I have insurers in my group -- or whether that anger is going to be turned against lawmakers who created the law in the first place,” White said.
He also noted that few states have published proposed premium increases, with Maryland’s ranging from 25 percent to 138 percent, while Rhode Island comes in at a modest 3 percent to 8 percent.
White said that some exchange regulations still haven’t been finished, while many states -- including New Jersey -- haven’t passed laws to allow the exchanges to conform to state insurance markets.
“Within the next seven months, between now and January, a lot of things have to fall into place,” White said.
White emphasized that the ACA didn’t focus on containing healthcare cost increases. He made several suggestions to the audience about ways that state governments can address this issue, including making the quality and price of healthcare more transparent and requiring that hospitals that aren’t in competitive markets to negotiate a single contract with all insurers, which would make the hospitals the healthcare equivalent of "utilities.”
Other speakers at the event addressed different healthcare topics.
Wardell Sanders, president of insurance trade group the New Jersey Association of Health Plans, noted that there would be several factors that would push up the price of premiums, including new taxes on insurers and a new federal mandate to cover dental costs for children.
Sanders foresees that federal subsidies will generate a lot of interest in the exchange on the part of individuals, while small businesses will find them less compelling.
Subsidies will be targeted toward residents between 138 percent and 400 percent of the federal poverty line, currently amounting to between $15,856 and $45,960 for a single person and between $32,499 and $94,200 for a family of four.
Richard Bagger, Celgene Corp. senior vice president, emphasized the importance of medical innovation in addressing healthcare needs. He noted that medical research and development has been correlated with rising life expectancy, which in turn has driven economic growth. His employer produces drug therapies for cancer. He is the former chief of staff to Gov. Chris Christie.
Dr. Poonam Alaigh, a Common Sense Institute board member, said it’s important for the state to make the Medicaid expansion work, including effectively reaching the eligible uninsured population. That would be residents with income below 138 percent of the poverty line. Alaigh formerly served in the Christie administration, as health and senior services commissioner.