Society of Actuaries: ACA Impact Will Vary “Substantially Across State Lines”

The New York Times has a front-page story this morning examining the impact of the Affordable Care Act (ACA) on individual market premiums in New York.  The article states that, “State insurance regulators say they have approved rates for 2014 that are at least 50 percent lower on average than those currently available in New York.”

When examining the impact of the ACA on premiums, it is important to note the wide variation in impact that is likely to occur across states.  As a previous Society of Actuaries (SOA) study found, consumers can expect the “average change in individual market costs varying substantially across state lines.”

According to the SOA report, “the significant state-by-state variation can be attributed to many factors, including whether or not the state sponsored a high-risk pool, differences in current underwriting practices, and demographic characteristic and income level differences in state populations. In simplest terms, the states that will see large increases generally have low current individual costs and those showing decreases have high current individual costs, with all states moving closer together but at a higher level overall.”


As many of you know, New York was one of eight states that enacted insurance market reforms in the 1990s without requiring everyone to purchase coverage.  As the Times story notes, these reforms caused significant disruption in the state’s individual insurance market:

“For years, New York has represented much that can go wrong with insurance markets. The state required insurers to cover everyone regardless of pre-existing conditions, but did not require everyone to purchase insurance — a feature of the new health care law — and did not offer generous subsidies so people could afford coverage. With no ability to persuade the young and the healthy to buy policies, the state’s premiums have long been among the highest in the nation. ‘If there was any state that the A.C.A. could bring rates down, it was New York,’ said Timothy Jost, a law professor at Washington and Lee University who closely follows the federal law.”

The article adds that “Because the cost of individual coverage has soared, only 17,000 New Yorkers currently buy insurance on their own. About 2.6 million are uninsured in New York.”

Given that New York previously enacted many of the insurance market reforms required by the ACA, the impact on premiums in that state will be much different than in the vast majority of states that do not currently have those reforms in place.

To learn more about the impact of the ACA on premiums, visit

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