AHIP Senior Vice President of State Policy Candy Gallaher wrote an article for the newsletter of the Insurance Regulatory Examiners Society on the affordability challenges accompanying implementation of the health reform law.
From the article:
“To create an affordable and sustainable health care system, key provisions in the ACA will need to be addressed to avoid significant cost increases for consumers and employers. These include:
• Essential health benefits – Ignoring affordability issues when designing the essential health benefits package could force millions to purchase coverage they do not need, want, or are able to afford, in turn discouraging some from purchasing coverage and driving up costs even further.
• Age rating compression – The ACA limits the age rating band to a 3:1 ratio, starting January 1, 2014, causing an overnight increase in premiums for younger individuals (18-49) that live in states with broader age bands, such as 5:1. This increases the likelihood that younger, healthier people will choose to pay the penalty and wait to purchase health insurance until after they get sick or injured, thus driving up costs for everyone else.
• Health insurance tax – A new $100 billion federal tax on health insurance premiums could add on average at least 2-3% to the cost of coverage starting in 2014. This tax will impact people purchasing coverage in the individual market, small employers, and beneficiaries with private coverage in Medicare and Medicaid.”