COLUMBUS: Medical claims costs in Ohio could jump an average 81 percent for individual policy holders by 2017 under the federal health care law, a study released Tuesday by the nation’s leading group of financial risk analysts says.
The cost of medical claims is the biggest driver of health insurance premiums.
Nationally, claims costs are expected to rise an average 32 percent per person in the individual health insurance market by 2017. The Society of Actuaries report said the increase will largely be due to people in poorer health joining the individual insurance pool.
The study looked at medical claims costs in individual health insurance markets, where people purchase coverage directly from insurers. It does not project claims costs for employer plans, which cover most workers and their families.
Ohio’s insurance director, Lt. Gov. Mary Taylor, said the estimates are in line with the findings that a consulting firm prepared for the state.
“Unfortunately, we are anticipating big increases in the market,” Taylor said in an AP interview. “That’s something we have been concerned about.”
Should Ohio not move forward with Medicaid expansion, the cost increase could be a tad larger, about 82 percent. In either case, state officials have blamed the federal law for anticipated spikes in costs because they say Ohio’s market hasn’t been bogged down by mandates and is served by dozens of insurance carriers whose competition keeps costs down.
Republican Gov. John Kasich has proposed expanding Medicaid, and his administration has weighed the potential cost increases to cover an additional thousands of low-income Ohioans.
“It’s clearly not going to fix the problem, but it’s one of the ways to mitigate it,” said Eric Poklar of the governor’s Office of Health Transformation.
The Obama administration questioned the design of the Society of Actuaries’ study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law, such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. The study also doesn’t take into account the potential price-cutting effect of competition in new state insurance markets that will go live Oct. 1, administration officials said.
Ohio has opted to let the federal government run its new insurance marketplace, also called an exchange. The state plans to keep its authority to regulate health plans in and out of the exchange, but leave it to Washington to run.
Taylor, a Republican, has been the state’s most vocal critic of the federal Affordable Care Act. She said the anticipated spike in claims costs would be the same even if the state were running its own exchange.
“There would be no difference in the impact on insurance premiums if the state were running the exchange,” she said. “Because the insurance companies have to comply with the new federal mandates and the new federal rules with every health insurance product that they sale.”
She said the best way to address the potential jump in claims costs would be for the federal government to allow states the flexibility to come up with their own solutions.
More than 1.5 million Ohio residents are uninsured, or about 14 percent. A report prepared for the Ohio Department of Insurance by consulting firm Milliman Inc. estimated that 524,000 Ohioans would be enrolled in the exchange designed for individuals by 2017.
According to the Milliman report, a healthy young man in the individual market could experience a rate increase of between 90 percent and 130 percent, while a 60-year-old with chronic health conditions may see a significant premium decrease.