Report highlights reform’s impact on health costs

The Department of Health and Human Services recently released a report analyzing health insurance premiums for individuals and small businesses and how the health reform law will give some relief for rising costs.

According to the report, the Affordable Care Act has already helped Americans through a small business health care tax credit, reinsurance for early retirees and premium assistance for uninsured people with pre-existing conditions.

Roughly 16.6 million workers are eligible for $6 billion in tax credits for 2010 and 2011, and reports have indicated more small businesses are offering health coverage. UnitedHealth Group, for example – America’s largest health insurer – has enrolled 75,000 new small business employees.

More than 5,000 businesses, unions, governments and organizations are also participating in the Early Retiree Reinsurance Program to help keep coverage available to retired workers age 55 to 64.

The department says small businesses have been hit the hardest by high rates, paying on average 18 percent more for the same health plan as would a large business. That’s compounded with broker fees, which can add as much as 10 percent to premiums. Between 1999 and 2009, according to the report, the percentage of small businesses with fewer than 200 workers offering health insurance dropped from 65 percent to 59 percent.

The market has also been rough for individuals, who’ve been told their premiums would go up by an average of 20 percent. Rampant health care costs, according to the report, can be attributed to fewer insurance choices and little transparency or oversight, among other reasons.

But 2010 did see a little break for workers, the report states, as family premiums in the employer-based market increased only 3 percent compared to 11.2 percent in 2004.

Health insurance exchanges
HHS estimates between 14 percent and 20 percent premium savings for people purchasing coverage through health insurance exchanges in 2014. Assuming the 20 percent savings, families could save as much as $2,300 per year and individuals up to $800, compared to individual market coverage with the same level of benefits without the law. With premium tax credits, the savings from health reform range from $9,900 for a family of four with income of $33,525 to $3,500 for a family with an income of $78,225.

Group market advantages
The Congressional Budget Office estimates premiums in the small-group market could be up to 2 percent lower than they would be without health reform. Assuming family premiums for small business without the law of $17,200, this translates into roughly $350 per family.

Plus, there’s the option to purchase a “bronze” plan via an exchange. The premiums could be $2,500 lower for singles and $6,100 lower for families. Bronze plans have lower premiums, cover 60 percent of average medical costs, and provide essential benefits, which include emergency services, maternity care and prescriptions.

Furthermore, in 2014, higher small-business health care tax credits kick in, paying up to 50 percent of premium costs, as opposed to the current 35 percent.

Large companies will see a premium reduction of up to 3 percent, mainly because of increased enrollment of healthy workers and dependents.

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