Health Insurance Claims Costs to Soar under Health Reform Law

health insurance claims

A new study reveals that President Barack Obama’s health reform law could result in a significant jump in medical claims costs in the next few years. While higher health insurance claims don’t directly impact consumers, the report found that higher costs will likely result in higher insurance premiums down the line.

Health Reform Law Impacts Medical Claims

The Society of Actuaries recently released a report revealing that the health reform law will result in an average 32-percent jump in medical claims for American individuals’ policies.

The leading group of financial risk analysts found that, while some states will see medical claim costs per person decline, the overwhelming majority will experience a double-digit increase in individual health insurance markets where people purchase coverage directly from insurers.

By 2017, the analysts believe California will see a 62 percent increase, while Maryland and Ohio will jump even further, seeing increases of 67 percent and 80 percent, respectively.

The primary reason the society expects the increase in premiums is that people with poorer health are expected to join the health insurance pool due to the health reform law’s requirement for all Americans to purchase coverage.

How Health Insurance Claims Impact Premiums

Many health insurance consumers are unaware of the correlation between medical claims costs and health insurance premiums when, in fact, claims are one of the biggest drivers of premium costs.

If an insurance company is repeatedly required to dish out anywhere from 30 percent to 80 percent more to cover the cost of care for a patient, in time the insurer will begin to shift some of those costs to that patient.

This means, while the health reform law is making strides to reduce costs, an increase in claims costs could still likely impact premium costs.

Erin Shields Britt, a spokeswoman for Health and Human Services, has responded to the survey, telling Fox News “It’s misleading to look at only some of the provisions of the law because, taken together, the law will reduce costs.”

The administration says the study ignores cost relief strategies in the law like tax credits that will help people afford premiums, along with special payments to insurers who attract an outsize share of the sick.

Other experts have agreed that subsidies and payments could help reduce the impact an increase in claims costs could have on premiums.

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