Health Insurers Warn of Higher Premiums

Posted in Health Care , Health Insurance

October 16th, 2009

Two reports released this week by health insurers warn that the new reform passed by the Senate Finance Committee could result in higher premiums. According to the reports, released by PricewaterhouseCoopers for America’s Health Insurance Plans and Oliver Wyman for Blue Cross Blue Shield, premiums could increase as much as $3,000 – $4,000 per year for each family that doesn’t carry employer-based coverage.

While the reports acknowledge that the bill would have no intentions of increased premiums, some specifics of the bill would ultimately make coverage unaffordable for millions of people:

• Penalty for uninsured too weak – According to the reports, the annual penalty for not obtaining coverage is too weak ($750 per adult, per household), which would result in many people opting to pay the penalty rather than obtain coverage. This would result in those who do obtain coverage having to pay a higher premium to make up for those not insured.
• Regulations too harsh - The reports also argued that the new regulations imposed on insurers would drive up premium costs. These regulations include the inability to deny coverage based on preexisting conditions, having to limit how much they charge based on age, and being required to meet minimum standards for the quality of coverage offered.
• Tax on high-cost insurance plans could spread – The insurers argued that the proposed tax on high-cost insurance plans (plans above $8,000 for individuals or $21,000 for families will be taxed 40 percent) could spread to other plans and make more plans subject to the tax. Also, the tax, which is intended for employers and insurers could spread to customers through higher premiums.

Both the White House and congressional Democrats dismiss the reports as slanted because they’re coming from insurance companies, which are notoriously opposed to new health care reform because most of it places restrictions on insurers.

While analysts admit that while insurance costs to consumers could end up being higher than the bill proposes, they won’t likely reached the levels insurers argue they could reach.

Do you think the new health care bill passed by the Senate Finance Committee could have negative financial repercussions?