Is the Affordable Care Act's Impact Over-hyped?
NEW YORK ( MainStreet) Obamacare is coming, and you probably won't feel a thing.
That's the result of a set of studies recently conducted by the RAND Corporation and Kaiser Foundation, two think tanks dedicating considerable resources to asking just how this sweeping piece of legislation will change the American health care marketplace. With the Affordable Care Act's (ACA) state insurance exchanges starting next month, now is the right time to ask the question.
The somewhat surprising answer is that, for most consumers, it won't.
"In general, there won't be a big spike in premiums because of the Affordable Care Act, so there shouldn't be a big rate shock," said Dr. Carter Price, a mathematician with the RAND Corporation. "Some states will see an increase in premiums, some states will see a decrease in premiums... But across the system, premiums won't be higher."
Price's team looked at data from ten different states to model how the law will change the health insurance marketplace, both in its impact on premiums and enrollment. The team's first finding was that the law should largely work as intended, reducing the predicted number of uninsured Americans by more than half over the next two years. As far as prices go, however, the team found that Americans just won't see many changes.
It's an issue of demographics.
"It's going to depend a lot upon the demographics of the population in each different area," Price said, "and particularly it will depend on what the uninsured population looks like. So in some states where you have a large uninsured population, and that uninsured population is relatively healthy, you're likely to see a big increase in the number of people who are enrolled in the non-group market but not a huge response in premiums."
Health insurance premiums are driven by what's known as the "risk pool," the number of healthy people compared to the number of sick ones in an insurance plan. The larger the sick population in pool, the more the insurance company is paying out per-person and the higher premiums get.
Under the Affordable Care Act, the biggest two changes to these risk pools will come from the individual mandate and required coverage regardless of pre-existing conditions. As Price explained, whether or not local premiums change will all depend upon the relative health of the uninsured population. The more new sick people enrolled, the higher prices will get and vice versa.
With some exceptions, the RAND report found that these demographics will generally work in favor of the consumer. The uninsured population is on average a young and healthy one that chooses not to get insurance because it seems unnecessary or expensive. In most parts of the country, therefore, these demographics will mean more healthy members of the risk pool, and therefore more stable (or marginally lower) insurance rates.