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32% Rise in Health Claims Projected

Health claim costs per member, per month for non-group individual health insurance plans will increase 32% under the Affordable Care Act (ACA) is a key finding in the Society of Actuaries study release in March 2013.  Reasons for the sharp premium increase projections include the impact of a) high risk pool members, b) employers dropping group coverage, and c) increased morbidity from selection by those currently uninsured who now purchase coverage.  The corresponding effect on premium cost was not studied but it appears rising costs would cause a significant rise in premiums charged by insurance companies.

Other key findings include:

  • After three years of exchanges and insurer restrictions, the percentage of uninsured nationally will decrease from 16.6% to between 6.8 and 6.6%, compared to pre-ACA projections.
  • Under the ACA, the individual non-group market will grow 115%, from 11.9 million to 25.6 million lives; 80% of that enrollment will be in the Exchanges.

The 83 page study attempts to answer a number of other technical questions regarding enrollment and cost projections.  One notable exception to the analysis is that it does not include an increase in utilization due to "pent up" demand. A study of near elderly uninsured who are approaching Medicare age found that pent-up demand exists for physician care, but not for hospital inpatient care. That study indicated that during the first two years after receiving Medicare enrollment the previously uninsured had 30% more physician visits.  This may indicate that the newly insured under ACA will drive costs with a significant increase in physician services.

Source: Society of Actuaries, Research release March 2013 – Cost of the Future Newly Insured under the Affordable Care Act (ACA)


John B Sullivan, CIC

Thursday, March 28, 2013 at 11:26am PDT

“Affordable” wasn’t referring to you unless you are uninsured or uninsurable for health insurance. Right or wrong, the ACA will bring high cost claimants into the system and significantly raise costs for everyone. A portion of these costs were being paid by various governmental programs out of our view. Now you will see these costs in the private health system. As I said from the beginning, costs will rise sharply. Who pays and how these costs are divided up is in the complexity of ACA. John