HHS: Health Reform Already Working

Without health reform ‘consumers and businesses would face higher premiums,’ Sebelius says. | AP Photo

By: J. Lester Feder
January 28, 2011 04:50 AM EST

The Obama administration is firing back at one of the major attacks Republicans have leveled at the health reform law: that it will make insurance premiums rise.

A report released by HHS on Friday argues that individuals and families purchasing coverage through the exchanges in 2014 will save 14 percent to 20 percent over what coverage would cost them if the law had never been enacted. These savings come from market reforms and regulations — they do not include the tax credits that will effectively reduce premiums for some individuals by more than half.

The report points to “preliminary evidence” that provisions of the Affordable Care Act already in place will contribute to rate increases in 2011 that are lower than in previous years. State premium rate reviews have reined in premium hikes in states including Connecticut and California, and HHS says the new Medical Loss Ratio requirements will “likely lead to rebates” in 2012 for an estimated 5 million insurance customers. The report says early retirees from more than 5,000 businesses and unions are having their premiums reduced through the Early Retiree Reinsurance Program.

“For too long, skyrocketing health care costs have made it hard for businesses to provide coverage for employees and have made it difficult for families to afford coverage,” said HHS Secretary Kathleen Sebelius. “Without the Affordable Care Act, consumers and businesses would face higher premiums, fewer insurance choices and rapidly rising health care costs.”
The report’s claims are likely to be challenged by Republican opponents of health care reform. The report is based on projections contained in a Nov. 30, 2009, analysis of the ACA. But the administration omits a part of the CBO analysis, which is being used by the law’s opponents to claim that the law will actually increase premiums.

The ACA requires the purchase of benefit packages that are more comprehensive than those many Americans would otherwise buy. These more generous benefit packages may mean higher premiums, though they may also lower Americans’ out-of-pocket costs. HHS does not factor in the “benefit buy-up” because it believes comparing the cost of the same level of coverage gives a more accurate picture of the law’s effect on premiums. s

But using the same data to analyze the House repeal legislation, the CBO says, “if H.R. 2 was enacted, premiums for health insurance in the individual market would be somewhat lower than under current law, mostly because the average insurance policy in this market would cover a smaller share of enrollees’ costs for health care and a slightly narrower range of benefits.”

During hearings yesterday of the Health, Education, Labor and Pensions Committee at which Sebelius appeared, Sen. Mike Enzi (R-Wyo.) said that, based on these figures, “As a direct result of the new law millions, of Americans will see their health insurance premiums increase.”

Today’s HHS report concedes that new patient protections have already contributed to a modest increase in premiums, citing insurance industry analyses that estimate a one- to two-percent increase due to provisions including the extension of dependent coverage up to age 26 and limits on lifetime and annual benefit restrictions.