AHIP Statement on HHS Report

Washington, DC– America’s Health Insurance Plans’ (AHIP) President and CEO Karen Ignagni released the following statement on the report released today by the Department of Health and Human Services (HHS):

“The new law will expand coverage to millions of Americans, but fails to address the health care cost crisis. Reducing health care cost growth is one of the most important economic challenges facing the nation. 

“Premiums are rising because medical costs continue to soar, younger and healthier people are dropping coverage in a weak economy, and the cost of new benefit mandates. Focusing solely on premiums while failing to rein in underlying medical costs will not make coverage more affordable for individuals, families and employers.

“The document released today overstates the cost savings associated with certain provisions of the new law and ignores major provisions that will raise premiums, including the new premium tax, age rating restrictions that impact younger workers, and benefit mandates that exceed the coverage that many purchase today.

“While tax credits are important to help people pay for coverage, tax credits do not bring down the growth of medical costs or reduce health insurance premiums.” 

Background Information:

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  How Are Health Insurance Premiums Determined

  :Insurance premiums are determined by a variety of factors including the type and amount of coverage purchased, the cost of providing medical care, changes in the risk pool, and new benefit mandates.
  
  

  
  
  

• New Premium Tax Will Increase Premiums: The sales tax on health insurance premiums will drive premiums higher, and according to Doug Holtz-Eakin “The premium tax alone means that American families will pay as much as $135 billion more in insurance premiums over the next 10 years.
  
  

  
  
  

• Age Rating Band Tightening Increases Costs for Younger Workers: Actuarial analysis of tightening of age rating bands: “…compressing age bands will significantly increase premiums for younger and healthier people. This will create significant risk that they will opt not to buy insurance—even with an individual mandate. By encouraging younger and healthier people to opt out of insurance, these rate compression proposals would result in higher average prices and more uninsured over time.”
  
  

  
  
  

• Essential Benefits Drives Up Costs for Employers and Taxpayers: According to CBO, essential benefits buy ups would 

  target="_blank">increase premiums between 27 to 30 percent

  .  Furthermore, Jonathan Gruber, a respected economist and administration consultant, estimated that “a 10 percent rise in the cost of the essential benefits package would increase the cost of government subsidies by 14.5 percent, or $67 billion, while reducing the share of the insured by 4.5 percent ,or 1.5 million, through 2019.”
  
  

  
  
  

• Pre-existing Condition Study A Stretch According to the AP: “Most of those millions of people are covered by health insurance at work and don't face any immediate risk of being denied care for their pre-existing medical problems. And as a rule, those who take a new job and sign up in their employer's health plan are already protected by a 1990s law…‘It's a hypothetical situation, not an actual situation,’ said economist Paul Ginsburg, president of the Center for Studying Health System Change.  ‘Most of these people don't have a problem, with or without health reform, because they get their coverage through their employment, and employer coverage takes everybody.’”
  
  

  
  
  

• Health Insurance Premiums Track Directly with Benefits:
  
  

  
  
  

  

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• Health Plan Administrative Costs Down as a Percentage of Premiums Has Decreased 6 Straight Years:

  
  
  

  
  
  

  

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News Source : AHIP Statement on HHS Report