Department of Health and Human Services (HHS) Says Insurance Premiums Will Be 20 Percent Lower Than Expected in New Health Insurance Marketplace

HHS Secretary Kathleen Sebelius released a new report that finds
premiums in the Health Insurance Marketplace will be nearly 20 percent lower in
2014 than previously expected. The Affordable Care Act requires health insurers
in every state to publicly justify any premium rate increases of 10 percent or
more. Health insurance companies now generally have to spend at least 80 cents
of every premium dollar on health care or improvements to care, or provide a
rebate to their policy holders. In addition, when the Health Insurance
Marketplace opens for enrollment on October 1, 2013, consumers will be able to
make apples-to-apples comparisons of quality health insurance plans.

“Today’s report shows that the Affordable Care Act is working to
increase transparency and competition among health insurance plans and drive
premiums down,” said Secretary Sebelius. “The reforms in the health care law
ensure consumers will have access to better coverage at a lower cost in 2014.”
Data from the Medical Expenditure Panel Survey Insurance Component shows that
the average premiums for employer-sponsored insurance increased by only 3
percent from 2011 to 2012, the lowest rate of increase observed since the data
series started in 1996. Already the 80/20 rule, or medical loss ratio, has
saved 77.8 million consumers $3.4 billion up front on their premiums as
insurance companies operated more efficiently and spent more on health care
than administrative expenses, and 8.5 million consumers can expect an average
rebate of approximately $100 per family. Since the health law’s rate review
provisions were implemented, the number of requests for insurance premium
increases of 10 percent or more has dropped dramatically, from 75 percent to 14
percent. To date, the rate review program has helped save Americans an
estimated $1 billion.

Source/more: Department of Health and Human Services