Dig deep Wisconsinites, you could pay about 30 percent more — or even double that — for health insurance in 2014.
If you get health insurance through your job and your employer chooses to pass the full projected increase in health insurance costs onto employees, you could wind up paying considerably more for health insurance starting Jan. 1, when the Affordable Care Act takes full effect, industry groups project.
There are a wide range of projections for how much costs could increase, whether people get their insurance through their employer or the new exchanges the ACA creates.
The studies that have been done on rates generally project cost increases but conflict on the extent of those increases, said Rebecca Larson, executive director of the Alliance of Health Insurers, a Madison advocacy organization. “Some say 30 percent (more) and some say 70 percent,” she said.
“In Wisconsin, we have a lot of competition and we’ve had a stable regulatory environment, so we’re hoping that will help,” Larson added.
Good news, more bad news
Whether you work for a small or large employer could make a difference.
For people who work for small employers there is both good and bad news, according to a study done for the state Department of Health Services. About half of small employers, 53 percent, will see average increases of 15 percent, but the other 47 percent will see cost reductions averaging 16 percent. Employers will decide how much in costs or savings to pass along to employees.
The Wisconsin Employee Benefit Advisors Association’s projections are less rosy. The group estimates employers of two to 50 people could see insurance cost changes ranging from a 10 percent reduction to increases of more than 60 percent.
WEBAA President Michael Farrell, an employee benefits consultant for David Insurance Agency, 1300 S. Green Bay Road, said his company estimated an average cost increase next year of 31 percent for its more than 50 client companies.
For companies of more than 50 employees, the association expects cost increases of 20 percent to 40 percent upon renewal. Larger companies will tend to be toward the lower end, Farrell said.
The WEBAA looked at another segment, the large, self-funded groups such as the MEI Coalition of Racine-area employers. “We think larger groups will see something more normal — 12 to 20 percent (increase), maybe,” because those employers avoid some provisions of the national health care law, he said.
If you don’t get health insurance through an employer, Medicaid or Medicare, you will likely be required to buy insurance through the new health insurance exchanges or pay a penalty. That insurance will also be far more expensive than it would have been without national health care, studies project.
For example, the Society of Actuaries projects a 79.5 percent average hike in the first two to three years of full national health care in the insurance that Wisconsin residents will buy on the exchanges the law creates — an increase from an average of $258 per month to $463.
However, partly offsetting that for those individuals and some small businesses will be income-based subsidies — which will range from zero to 96 percent, according to one study — for which many will be eligible.
Kristi Bohn, a health actuary with the Society of Actuaries based in Schaumburg, Ill., said not everyone will see a staggering cost increase of almost 80 percent; some will have partially offsetting federal subsidies, for example. Others may be older and already paying higher costs for insurance.
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An independent analysis done for the Wisconsin Department of Health Services projected a 36 percent to 37 percent increase in the cost of insurance for individuals. The study also said 57 percent of that population, or 91,000 people, will be eligible for some level of subsidies.
After applying those subsidies, the study estimated, 59 percent of the individual market, or about six people in 10, will experience an average premium increase of 31 percent.
The WEBAA expects a young, healthy person buying insurance on the exchanges to see up to a tripling of health insurance cost. Meanwhile, someone in his late 50s might see a cost reduction.
Farrell — who lobbied in Washington, D.C., against the ACA during its formation — gave this example: A 25-year-old who might have paid about $100 per month pre-ACA could see his monthly rate skyrocket to about $300, the association projects.
But a man in his late 50s who might have been paying $1,000 monthly would see his rate decline to $900, because the ACA does not allow more than a three-to-one spread in rates between young and old, Farrell explained.
Some health care industry officials expect people and companies to react to national health care in ways that undermine how it was supposed to work.
For example, anticipating cost increases for next year, some insurance carriers are offering early renewal and pre-ACA rates on Dec. 1, to avoid 11 months of the law’s rules and expected cost increases.
“That’s the big strategy for 2013,” said Michael Farrell, president of the Wisconsin Employee Benefit Advisors Association and an employee benefits consultant at David Insurance Agency.
Another possibility if health care is more expensive is that younger people, from their 20s into the early 40s, may not buy it until after developing an illness such as diabetes, said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, the health insurance industry’s national trade association.
The WEBAA also expects many younger, healthy people who would otherwise buy insurance on the exchanges the ACA creates to instead stay away and pay the annual penalty. It starts at $95 in year one or 1 percent of income, and quickly escalates to $695 or 2.5 percent of income by the third year.
But that will likely still be far cheaper for that population than buying insurance on the exchanges, Farrell said. If younger, healthier people pay the penalty instead of buying insurance, that would lead to “adverse selection,” with mostly the sick, the old and those with pre-existing medical conditions taking health insurance.
“Nationwide, the insurance sector will be left with an older, less healthy population,” Farrell predicted. “That’s why we (the insurance industry) don’t think the ACA is feasible.”
WEBAA and AHIP also expect more large employers to move to self-funding for health insurance.
“This segment will be far more likely to consider self-funding,” Farrell said. “It allow them to avoid many of the mandates ... We’ll see, we think, hypergrowth in self-funding.”
Besides avoiding certain ACA provisions, self-funding also rewards good characteristics such as young, healthy employees, Farrell said.
Zirkelbach said such wiggling away from ACA provisions is understandable. Although the law supposedly provides fixes for things that have been problematic in the past, Zirkelbach said, “States have tried some of these provisions in the past, and they have failed.”