Individual Medical Costs to Jump 32% by 2017

According to a new report by the Society of Actuaries (SOA), insurers will spend an average of 32 percent more for individual medical claims in 2017 than is currently being spent on healthcare. In some states, those costs could rise by as much as 80 percent.

According to the Actuaries Report, the principle driver of these increased costs is the Patient Protection Affordable Care Act’s (PPACA) provision that allows individuals with pre-existing conditions to obtain insurance. These higher costs will likely result in higher insurance premiums, the actuaries group suggests.

According to the SOA, not all states will experience huge spikes in health insurance premiums.  New York and Massachusetts, for example, should only see medical claims costs grow by 14 percent and 13 percent, respectively. The reason for this is those states already prohibit insurers from excluding consumers with pre-existing conditions, so price increases associated with this change have already been built into their health insurance pricing structure.

Break Away from the Static

Although Health and Human Services (HHS) officials did not dispute the study’s central conclusions, these government officials argued vigorously that the study’s authors did not counterbalance their findings with the many good things that the new law accomplishes.  HHS Secretary Kathleen Sebelius, for example, pointed out in response to reporter’s questions, that the tax credits that will help consumers pay for premiums and the special payments  insurers will receive for  enrolling a large share of sicker members will “mitigate the effects of the higher costs identified by the SOA.”

Other key findings in the SOA study are:

  1. After three years of exchanges and insurer restrictions, the percentage of uninsured nationally will decrease from 16.6 percent to between 6.8 and 6.6 percent, compared to pre-PPACA projections.
  2. Under the PPACA, the individual non-group market will grow 115 percent, from 11.9 million to 25.6 million people; 80 percent of that enrollment will be in the Exchanges (now called Marketplaces).

The findings of the SOA study will likely further encourage opponents of the PPACA to seek to repeal or modify the legislation.  ADVOCATE will continue to provide updates as information becomes available.

Best Regards,

Kirk Reinitz, CPA