Center Forward and Milliman research group have begun studying the potential impact of the Affordable Care Act on current insurance premium rates. The study focuses on the costs of individual and group comprehensive medical insurance statewide.
The data reflects the effect ACA provisions will have on premium rates and rate structures for individual markets in six states, some with traditional rate setting procedures and some with more stringent requirements – AZ, FL, IL, NJ, OH, WI.
In addition to the states studied in the report, other states have begun disclosing ACA premium rates at prices lower than originally projected by the Congressional Budget Office. These include California, New York, Maryland, and Colorado. Officials in Maryland, for example, have indicated that state health insurance premiums will be less than expected and amongst the lowest of the 12 states that have already released pricing information. The US Department of Health and Human Services expects 10 other states to follow Maryland in releasing premium rates lower than those projected.
The report, however still indicates expected rises in insurance premiums throughout the states with a more traditional pricing model such as AZ, FL, IL, and OH. These projections are made prior to the granting of any federal subsidies. States with more stringent requirements and already high premiums may show little to no change.
New York, a state with a strict universal healthcare system already in place, is anticipating premium rates to decrease amongst non-group, healthier individuals as more enter the exchange market, increasing demand.
With the application of federal subsidies and tax credits, premium rates could decrease significantly, however the amount in which it decreases is dependent on the eligible individuals household income. The subsidy is to operate as a percentage cap based on a persons annual income. The cap is determined based ones income in comparison to the Federal Poverty Line.
Those not eligible to be awarded tax credits and subsidies may face higher or increasing premium rates in 2014.
The Center Forward & Milliman report can be downloaded here.