Actuaries: Ohio and Wisconsin Face Highest Cost Hikes Under Obamacare
A report from the Society of Actuaries found Ohio and Wisconsin face the steepest health care cost hikes under President Obama’s health care law.
The Buckeye State tops the list, while the Badger State checks in at No. 2 on the Society’s ranking of states expected to be hardest-hit by underlying claim costs under Obama’s law. Wisconsin claims cost increases are predicted to climb by as much as as 80 percent by 2017, second only to Ohio’s 80.9 percent, according to the actuaries.
A spokesman for the U.S. Department of Health and Human Services pushed back against the report, saying it is misleading to focus on the cost increases.
“The health care law will bring down costs and save money for your people and families. It’s misleading to look at only some of the provisions of the law because, taken together, the law will reduce costs,” said department spokesman Fabien Levy.
The actuaries found the law will reduce costs in a few states. New York is expected to have cost declines of nearly 14 percent, and insurance costs in Massachusetts would decline by 12.8 percent, and in Vermont, 12.5 percent.
But overall, the report predicts expected changes in member composition of the individual health care market could drive up underlying claims costs by an average of 32 percent nationally by 2017. The Society predicts as many as 43 states could have double-digit-percentage claims cost increases.
Overall, the Actuaries expect Obama’s law to achieve some of its aims in increasing coverage, but few in reducing costs.
“The projections in this study suggest that when the dust settles by 2017, we can expect mixed results on the reform bill’s goals of expanding coverage and reducing costs,” says Kristi Bohn, FSA, a consulting health staff fellow at the Society of Actuaries.
There’s no doubt the act will significantly reduce the number of uninsured Americans, with the size of the individual market expected to double, the Actuaries found.
“This group of people are considered to be ‘good risks’ and are generally expected to bring down average costs. But other changes in composition of the individual market will more than offset these lower costs, and in fact, will drive average costs up,” Bohn said.
Penalizing States with Lower Costs
The study found a significant number of people now insured through state-sponsored high-risk pools or the temporary Pre-Existing Condition Insurance Plan will move into the individual market, taking their higher insurance costs with them. The study also predicts an influx of people moving from employer-offered plans to the individual market.
“According to the research, even small shifts from the employer-provided market will have a significant effect on costs in the much smaller individual market,” the report states.
The Actuaries found states with lower individual insurance costs are effectively penalized to the benefit of higher-cost states such as New York, Massachusetts, and New Jersey.
“In simplest terms, the states that will see large increases generally have low current individual costs, and those showing decreases have high current individual costs, with all states moving closer together but at a higher level overall,” Bohn said.
Wisconsin Expects Higher Costs
The Wisconsin Office of the Commissioner of Insurance commissioned a report in 2011 that projected insurance rate increases of 31 percent for nearly 60 percent of the individual market. That’s one reason Wisconsin Republican Gov. Scott Walker, bucking the trend of Republican governors who have accepted federal Medicaid payment increases in the billions of dollars, has turned down the money and turned over responsibility for the creation of health care exchanges to the federal government, according to Walker spokesman Cullen Werwie.
“The Affordable Care Act will cost people more money, and it is bad for Wisconsin’s economy,” Werwie said. “These are some of the many reasons Wisconsin is not running a state exchange. As an alternative, Gov. Walker’s budget includes a plan to increase transparency to drive down health care costs.”
Wisconsin’s insurance risk pool currently covers about 24,000 high-risk individuals, some with significant health problems, including organ transplant patients, according to J. P Wieske, public information officer and legislative liaison for the Wisconsin Office of the Commissioner of Insurance. Those individuals go into the federal pool, presumably beginning Jan. 1, 2014, driving up costs in Wisconsin’s individual insurance market.
“We’ve had a good way to insure people with high-risk health issues,” Wieske said. “We’ve got a market that works.”
“Premiums Will Go Up”
Ohio Lt. Gov. Mary Taylor, a Republican, said she fears Obama’s law glosses over the differences between state systems, causing problems for her state.
“That is really one of our concerns, that we are going to see this one-size-fits-all approach, yet our states are different [from others]. We have unique needs,” Taylor said.
A report commissioned in 2011 by the Ohio Department of Insurance projects individual premiums could rise by as much as 55 percent to 85 percent in 2014, numbers on par with those in the Actuaries’ study.
“If everything goes as planned, premiums will go up,” the lieutenant governor said.
Taylor notes the Actuaries’ list is not one she’d like the Buckeye State to lead.
“I can think of 10 things off the top of my head I’d prefer to be No. 1 at than this,” she said.
M.D. Kittle (email@example.com) writes for Wisconsin Watchdog, where portions of this report previously appeared. Used with permission.