PPACA Premiums are Lower than You Think

Or so The Brookings Institute would like us to believe. What would cause Brookings to take such a stance especially since parts of the PPACA increased costs dramatically and premiums have increased dramatically? Coverage such as:

mandated guaranteed issue regardless of health status;

restrictions on the ability to charge different premiums based on anything besides age and smoking habits;

requirements for plans to offer certain benefits deemed “essential;”

limits on out-of-pocket costs an enrollee can pay for covered services in a given year; and

the elimination of any lifetime limits on coverage

have had a significant impact on costs.

Countering elements of the PPACA push the cost dynamics in the opposite direct keeping the impact of costs lower. The individual mandate and federal subsidies increased the pool of people seeking coverage increasing the size of the market and resulting in decreased costs and subsequent premiums. While Healthcare.Gov has its issues; however, it did increase transparency of the market place where consumers can compare the costs of the various plans and what is offered as measured against an actuarial standard.

A larger market or pool of people shopping for healthcare pushed against a historical trend of higher premium increases. Couple this with states reviewing policy pricing and the MLR limiting the percentage of premium being applied to administration. The trend has been lower then pre-PPACA.

As a comparison Brooking used a second tier Silver plan to point out the differences pre-2014 and after implementation of the PPACA.

average premiums for the second-lowest cost silver-level (SLS) marketplace plan in 2014, which serves as a benchmark for ACA subsidies, were between 10 and 21 percent lower than average individual market premiums in 2013 (page 4 graph), before the ACA, even while providing enrollees with significantly richer coverage and a broader set of benefits. Silver-level ACA plans cover roughly 17 percent more of an enrollee’s health expenses than pre-ACA plans did, on average. In essence, then, consumers received more coverage at a lower price.”

Without the PPACA, Loren Adler and Paul Ginsburg of Brooking’s Center for Health Policy analysis shows a 2nd tier Silver Plan insurance policy premiums would have been 30% to 50% higher in 2017 (page 9 graph) even if premiums grew 10% by 2017 in comparison under the PPACA.

Is it free, no. Is it cheaper, yes. Could it be better, it will be in time.