[LA FEATURE]Covered California: Affordable Care Act

LA FEATURE

What you need to know about the Affordable Care Act and how it affects Californians

Study: Health Care Law to Increase Costs in Calif.

By Judy Lin
|  Wednesday, Sep 11, 2013  |  Updated 11:59 AM PDT
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Study: Health Care Law to Increase Costs in Calif.

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The study by the Society of Actuaries stated that the increase will be in large part because sicker people will join the individual insurance pool.

 Medical claims costs filed by individual policy holders could rise as much as 62 percent over the next four years in California under the Affordable Care Act, according to a study released Tuesday by the nation's leading group of financial risk analysts.

The costs are the biggest driver of health insurance premiums and that could mean higher prices for residents who will buy individual policies through California's health benefit exchange.

The study by the Society of Actuaries stated that the increase will be in large part because sicker people will join the individual insurance pool.

The report does not project medical claim costs for employer-sponsored plans, which cover the majority of workers. In California, the study estimated medical claim costs will rise 62 percent by 2017.

If the state had not accepted an expansion of Medicaid, the cost increase would be smaller, about 55 percent. U.S. Health and Human Services Secretary Kathleen Sebelius and the Obama administration questioned the design of the study, saying it ignores tax credits to help people pay premiums and special payments to insurers who attract more of the sick.

Sebelius said that it's difficult to compare catastrophic plans being sold today to the comprehensive coverage that individuals will get under the law starting next year.

Officials at Covered California, the state's health exchange, echoed that sentiment Tuesday.

"The study is misleading because it does not consider the impact of the federal subsidies, which we believe will reduce overall costs by as much as 60 to 90 percent for millions of California residents,'' said Oscar Hidalgo, spokesman for Covered California. "In addition, having a health plan marketplace with considerable purchasing power such as Covered California has a positive impact on rates that is not factored into this report.''

About 5.6 million Californians under age 65 are uninsured, according to a model of insurance markets known as the California Simulation of Insurance Markets.

The state estimates that more than 4 million people will purchase private coverage through Covered California by 2019. The remaining 1 million are ineligible due to their immigration status.

For complete coverage of the Affordable Care Act implementation as well as tools, calculators, state-by-state information and a detailed FAQ, visit our ACA section.

 

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