Study: Individual market customers pay higher premiums after ACA

Individual market enrollees are paying higher monthly premiums on average after Affordable Care Act implementation, according to results from a new HealthPocket study.

HealthPocket, a technology company that compares and ranks available health plans, compared average monthly premium costs before and after ACA implementation. Using data for on-exchange and off-exchange plans in the two largest metropolitan areas of each state, HealthPocket calculated average, unsubsidized monthly premium costs in 2013 and 2014 across all plans for three demographic profiles: Non-smoking men and women (without spouses or children) ages 23, 30 and 63. Premiums climbed by double digits for each group, the study found.

For 23-year-olds, premiums across all plans rose 78.2 percent for men and 44.9 percent for women in 2014 compared to the pre-reform market. For 30-year-olds, average premiums climbed 73.4 percent for men and 35.1 percent for women. And for 63-year-olds on the brink of Medicare eligibility, premiums rose an average of 37.5 percent for women and 22.7 percent for men.

Yet "the degree to which the cost of consumers' premiums increased is a more complicated matter than suggested by the premium data," the study concluded.

There are several qualifying factors worth noting:  

First, the ACA prohibits application denials due to preexisting medical conditions. In the pre-reform market, about one-out-of-five applicants was rejected for this reason, the study noted. So the post-reform market includes more enrollees needing costly care. It also offers richer coverage due to 10 categories of essential benefits, which few pre-reform plans provided. This reinforces what Christopher Carlson, an actuary with Oliver Wyman, told Congress: "If you increase benefits, the premiums will go up and if you increase costs to the insurers those will have to be funded somehow."

Moreover, government data HealthPocket used to measure the pre-reform market didn't include "rate-ups," which are increased premiums offered to potential new customers after application processing. Eighteen percent of applicants in the pre-reform market received rate-ups, the study noted.

Finally, availability of subsidies affects premiums. But many young adults don't qualify for subsidies. And the net effect of these is transferring costs to another payer (namely, the government) rather than eliminating them, the study noted.        

For more:
- read the HealthPocket study report

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