Kansas State University


Issues in Health Reform

Category: General ACA information

Is Health Reform Responsible for Premium Increases?


Well, depends who you ask.   Just do a Google search on “premiums and health care reform” and a plethora of journal articles, research studies and opinions will claim one of two main arguments:


1.) Obamacare is directly responsible for ongoing increases to consumers’ health care costs.  Premium costs are rising because of the health reform law.




2.) Healthcare costs and premiums have been on the rise for years; Obamacare actually slows the rate of increase and moderates consumer’s spending on health care.  Cost savings will be recognized with time.


Let’s take a closer look at the arguments mentioned above:


Obamacare is directly responsible for ongoing increases to consumers’ health care costs.


A report released this month (March 2013) by the House Committee on Energy and Commerce credits Obamacare as the driving force in premium increases for young adults and middle-income Americans.  The report claims the Affordable Care Act’s (ACA) mandated reforms  have already and will continue to result in higher costs for insurance companies which are in turn passed on to consumers.   The report cites the following ACA reforms/rules directly increase premiums for consumers:  guaranteed issue and community rating, essential health benefits (EHBs), the individual mandate and fees and taxes on plans, drugs and medical devices.


An independent report by Giesla and Carlson (February 2013) reviews the impact of age rating limits established by the ACA, which means older adults can only be charged three times that of a younger adult (currently most states have a ratio of 5:1 or higher).  This report suggests young adults aged 21-29 should expect to pay more for coverage than what they would have without the ACA.


Obamacare slows the rate of increase and moderates consumer’s spending on health care.


Some analysis claims health care costs have been sky-rocketing for years, not just since the ACA was passed in 2010. A KaiserEDU.org background brief on U.S. Healthcare Costs notes that in the United States health care costs increased significantly from 1980 to 2010, with health expenditures nearing $2.6 trillion in 2010, over 10 times the $256 billion spent in 1980. The report states some major factors in cost growth have been the rise in chronic diseases and administrative costs.  The Kaiser brief acknowledges several ACA measures aimed at cost containment including: greater government oversight and regulation of health insurer premiums and practices, increasing competition and price transparency in the sale of insurance policies through Health Insurance Exchanges, payment reforms that aim to reduce payments for treatments and hospitalizations resulting from errors or poor quality of care, and refocusing medical delivery systems to be  patient-centered and improve the coordination and quality of care.


Provisions in the Affordable Care Act used to support the argument that the ACA slows the rate of increase and moderates consumer’s spending on health care include the rate-review provision and the Medical Loss Ratio provision.  The rate-review provision mandates insurance companies must report and justify premium increases over 10%.  Under the Medical Loss Ratio Affordable Care Act provision, insurance companies are required to spend 80% of collected premiums on actual health care. Health and Human Services Secretary Sebelius wrote a blog post about the Medical Loss Ratio provision and how it will save Americans money.


Finally, some proponents of the ACA say that while it may be that the expansion of coverage options and higher quality plans of the ACA increase premiums, the emphasis on quality care, case management, and better service will bring overall health care costs down.



So, is health reform responsible for premium increases?  We’ll end as we started- it depends on who you ask.  Regardless, whatever facts and studies one choses to rely on to support or negate the impact of health care reform, the Affordable Care Act remains the law of the land.

Thanks to ckfwi.org!