Public fears about skyrocketing premiums because of health reform are vastly overstated. That is the main takeaway from a new RAND Corp. study, which finds Louisianans are likely to see their health insurance premiums decrease or remain about the same over the next few years because of the Affordable Care Act.[i] Many could see out-of-pocket savings of hundreds — or even thousands — of dollars per year.
Starting Oct. 1, Louisianans who aren’t offered affordable insurance at work — including the uninsured and those who already buy coverage on the “individual market” — will be able to shop in the new Louisiana insurance exchange marketplace set up as part of health reform. Coverage will go into effect Jan. 1, 2014.
RAND estimates 64 percent of exchange customers will be eligible for new federal tax credits that are designed to partially offset the cost of premiums and ensure coverage is affordable. Louisiana’s marketplace will be run by the federal government due to the state’s decision to not run its own.
Marketplace competition and tax credits — together with new consumer protections — will mean more affordable, high-quality insurance options for families. Standardized to take into account age, tobacco use and other factors, average premium costs for customers in the individual market could drop by 25 percent or more, the study says.
Of course, the “average” premium change will not describe everyone’s experience. While most people will see their premiums go down or stay about the same, a small minority could see their costs go up for a variety of reasons. But here it is important to compare apples-to-apples, as it is likely consumers who see an increase will also be getting much better coverage than they currently have – coverage that protects them from financial ruin in case of a serious illness or injury, instead of “bare bones” coverage that leaves them at risk.
The study also looked at who will be buying insurance through the individual market, and found two-thirds are people who are currently uninsured — and would remain so without reform. Another 23 percent already buy insurance in the individual market, but could get a better price with reform.
It should be noted that relatively few people will be touched by these changes. Only 4 percent of Louisianans buy health coverage through the individual market, a number RAND expects could jump to 9.6 percent after reform. The vast majority of Louisianans — about 75 percent — get coverage through their job or a family member’s job, Medicare or Medicaid. For the most part the reform law won’t change that.
Despite political opposition from Gov. Bobby Jindal and others, Louisiana will soon have an insurance marketplace where consumers can shop for affordable coverage, which means fewer uninsured Louisianans and lower premiums for families.
[i]RAND used its health policy microsimulation model to estimate insurance coverage and premiums in 2016 under two sets of assumptions, with and without the Affordable Care Act in effect. The study was funded by the US Dept. of Health and Human Services (HHS). RAND retained full editorial control.