The Affordable Care Act is attempting a highly complicated makeover, a process that requires delicate balancing of many facets of the health-care system. The mandate that nearly every citizen have some coverage beginning in January 2014 vastly expands the market for health insurance, opening the individual and small-group markets to millions of consumers who until now have found the cost of coverage prohibitive.
Thus, appropriately, the law aims to achieve a certain degree of stability and affordability in premium costs. But a steady stream of recent reports project troubling rate increases, averaging 50 percent or higher in some markets. For instance, most likely to face steep rate increases are those consumers, particularly the young and relatively healthy, who do not have employer coverage and buy insurance on their own.
The projections point to the calibrations required now and in coming years as the Obama White House and policymakers seek to fulfill the law’s considerable promise to hold down costs, and improve access and the quality of care for the majority, if not all, of Americans.
While it would be a cruel joke if an “affordable” law made care unaffordable, it bears keeping in mind that rising, even soaring, premiums represent a well-documented, decade-long pattern. In a national survey of trends in health insurance premiums and deductibles, the Commonwealth Fund, a health research group, calculated that premiums for family coverage in employer-sponsored plans (which typically are more affordable than non-group coverage) rose 62 percent from 2003 to 2011.
The report noted that if the trend continues, average premiums for family coverage would approach $25,000 by 2020. The question for policymakers is how effective an intervention against escalating costs they can craft as they finalize the rules for implementation.
It is equally important not to lose sight of the patient-protection goals, which by far are the most popular aspects of the legislation. Critics of the reform law are correct that the host of new requirements and benefits translate into high premium costs. For example, the law requires more comprehensive coverage (an essential benefits package) to assure a minimum level of coverage. It bars insurers from denying anyone who applies for coverage, regardless of pre-existing conditions. It prevents insurers from charging more based on medical conditions or gender, and removes annual and lifetime limits on coverage.
In short, the law extends benefits and protections for an expanded pool of health consumers, on the premise that the risks and costs will be spread across a larger population of healthy and not-so-healthy people. In the end, that is the reason for health insurance: shared costs for the shared risk that a healthy person could become very sick.