A recent report from the Society of Actuaries (SOA) projecting a double-digit rise in insurer's costs because of the Patient Protection and Affordable Care Act (PPACA) thrust the normally low-key group into unfamiliar territory: politics.
Groups who oppose the PPACA seized on the report's finding that medical claims costs will rise by 32% on average, as well as vary widely by state. Others questioned factors that the SOA left out of its study, such as not including the varying level of subsidies consumers can use to buy insurance on the exchanges.
Kristi Bohn, SOA's consulting staff health fellow, says the group started this study over a year ago to provide guidance on costs of newly insured, who will be entering the marketplace through federally required health insurance exchanges, compared to those currently insured.
"This is a little too technical for most people's interest levels so I was surprised that it was picked up so much," says Bohn. "We weren't trying to be political; we're not a political organization."
The report bolsters claims from the Association of Health Insurance Plans (AHIP) that premiums will rise under the PPACA. Bohn is quick to point out, however, that the SOA's findings don't implicitly make that conclusion.
"Premiums will be interesting," she says, suggesting perhaps that insurers may work to keep premiums from rising by changing up their networks or making them smaller.
The most surprising finding was the extreme disparities in medical claims costs among states. For example, Wisconsin is projected to see an 80% increase in medical claims costs while North Dakota will see just an 8.4% cost increase.
The variations served as talking points for Republicans trying to make the case that the PPACA isn't working. Utah Senator Orin Hatch used the hash tag #brokenpromises at the end of a message from his Twitter account to detail Utah's cost increase (28.4%). Other states did the same, though a few states—five—were able to announce a projected cost savings.
"We had an inkling that states like New York, or a state like Massachusetts, or Vermont could come down, but we didn't know how much," says Bohn.
The five states estimated to see a claims cost savingsunder the PPACA include:
- Massachusetts (12.8%)
- New Jersey (1.4%)
- New York (13.9%)
- Rhode Island (6.6%)
- Vermont (12.5%)
Bohn says despite the criticism that the report has received, the group made "reasonable" assumptions based on research that studied behavioral economics.
"We had no idea that this variation would exist, too. We didn't have an end in mind, and we were all surprised by the variation by state," she says.
Factors that influence the variations, according to Bohn, include the health of a state, the current uninsured rate, and whether the state attempted to care for its uninsured previously.
"A lot of these states have already tried to tackle what the Affordable Care Act tackles. So they already tried reducing the uninsured rate and now they get these valuable subsidies to people, so those states stand to benefit," she says.
As to how premiums will be affected by medical claims costs, it's unclear. Only Vermont has released its health insurance premiums for the exchanges. Vermont is running its own state-based exchange, called Vermont Health Connect.
So far, it has two insurers–Blue Cross Blue Shield of Vermont and MVP Health Care. The plans have proposed rates for individual plans that range from nearly $400 to more than $600. Another insurer, the Vermont Health Co-op, is waiting for its license application to be approved so it, too, can sell insurance on the exchange.
The proposed HIX rates are generally thought to be reasonable, but then, Vermont is also one of the only states expected to realize a cost-savings in medical claims over the long-term.
Bohn says actuaries are busy working to come up with rates for insurers that will be accurate. It's another reason she says she's surprised that the report became a political issue.
"Health actuaries, they're busy on all these topics because they have to come up with rates this week or within the next two months, basically. And this is one of the big risks of their decision, and it's also risk for the government because if the actuaries mess up, the government also has this risk corridor program to make up differences when markets are mispriced and so, for us it was not only an exercise to help actuaries, but it was an exercise to help the government, as well."
Jacqueline Fellows is a contributing writer at HealthLeaders Media.