The Washington Post

How Obamacare affects health plan premiums

President Obama pointed to the recent slowdown in health insurance costs during last night's debate as evidence Obamacare was working. Mitt Romney said that projected premium growth was evidence of an opposite trend: That Obamacare will cause families’ health costs to rise.

So, who is right? Here's what we do know about the health law and premiums: It likely did increase the cost of insurance coverage by requiring more expansive coverage. But the law's impact doesn't explain longer-term trends in the price of a health plan.

First, what we do know: The health-care law requires insurers to cover new benefits, like dependent coverage up to age 26 and free preventive care. The consulting firm Aon Hewitt recently looked into how that affects insurance premiums. They found that the new coverage requirements did indeed increase the cost of care.

The impact was, however, relatively modest for the large employer plans that already cover these benefits. For individual plans, which tend to have less robust coverage, Obamacare had a more significant effect.

To put it another way: Health plans under Obamacare cost more because they're delivering more benefits. Customers are paying more - and getting something back in return.

These benefits are, however, pretty tiny when you think of the big, expensive hospitalizations or surgeries that insurers tend to cover. That means they do a pretty lousy job explaining any longer term trends in insurance costs.

That includes the president's point about health insurance premium growth slowing shortly after the Affordable Care Act became law. Health care cost growth did indeed slow in recent years, although that slowdown looks to have predated the health-care law. Federal actuaries trace the slowdown in health insurance spending all the way back to 2003, a product of " increases in cost sharing, and a shift by consumers to lower-cost plans." 

Moving forward, the Congressional Budget Office does indeed expect insurance premiums to increase, by 5.7 percent annually. But the Affordable Care Act, again, doesn't seem to have a lot to do with those increases. In a separate report, the CBO estimates that the health law will increase premiums in the individual market slightly more, due to those extra benefits. It says the impact on large employers is harder to predict, given all the flux in the insurance marketplace right now. 




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