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Insurers Warn Of Overhaul-Induced Sticker Shock

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  • A new tax on premiums could raise prices as much as 2.3 percent in 2014 and more in subsequent years, according to a study commissioned by AHIP. Policyholders with plans that end in 2014 probably have already seen an impact from this.
  • Requirements that insurance plans in many cases cover more health care or pay a greater share of a patient’s bill than they do now also could add to premiums, depending on the extent of a person’s current coverage, according AHIP.

The Obama administration says the law balances added costs in several ways, including tax credits that will bring down what many consumers will pay for insurance.

“The health care law will bring down costs and save money for young people and families,” said Erin Shields Britt, a spokeswoman for the Department of Health and Human Services. “It’s misleading to look at one provision of the law alone. Taken together, the law will reduce costs.”

WHERE ‘RATE SHOCK’ MAY STRIKE
The impact of some cost hikes will be wide ranging. The new premium tax, for instance, will affect individual insurance, some employer-sponsored coverage and Medicare Advantage policies, which are privately-run versions of the government’s Medicare program for the elderly and disabled.

Other price hikes will vary due to factors like a person’s current coverage and age. Young people who currently have low-cost coverage may see some of the biggest hikes.

In many states, insurers charge a 60-year-old customer $5 in premiums for every $1 they collect from a 24- year-old. The logic behind that is that older people use health care more and generate more expensive claims than younger customers, so insurers need to collect more to help pay their bills.

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Posted by FanningCommunications on Apr 1st, 2013 and filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response by filling following comment form or trackback to this entry from your site

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