Cost of Private Health Insurance Coverage

Cost of Private Health Insurance Coverage <!--break--> <img class="dada-image-center" src="http://rochester.indymedia.org/sites/default/files/migrate_dada/ppm116_pwc_report_on_costs_-_final_101109%5B1%5D.pdf"><br> Introduction The health care reform debate has focused on three main issues: providing affordable coverage to the uninsured, promoting quality healthcare, and &quot;bending the cost curve&quot;, or slowing the growth of healthcare spending. While complementary in some cases, these goals can also conflict. Efforts to increase coverage and promote quality could lead to a more efficient healthcare sector, but they could also lead to increased growth in costs if implemented without a full appreciation of the downstream impact on cost of health insurance coverage. Analyzing the overall impact of these reform efforts requires an evaluation from all perspectives. America's Health Insurance Plans engaged PricewaterhouseCoopers (PwC) to examine the potential impact of certain provisions of health reform bills on the cost of private health insurance coverage. Private healthcare costs are anticipated to grow over the next decade by approximately 6 percent per year under current law, which is more than double the expected growth in the Consumer Price Index of approximately 2.5 percent per year.5 Controlling the growth in these costs will require restructuring and realigning the incentives in the system.6 While the healthcare reform packages take steps in this direction, a major focus of the current legislation is on expanding insurance coverage. These reforms propose to make insurance more widespread by providing new subsidies for the uninsured and those with lower incomes. This report focuses on several key provisions that are part of current health reform proposals that would have a significant impact on the premiums for private health insurance coverage, including: 􀁸 Insurance market reforms and consumer protections that would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement. 􀁸 An excise tax on employer-sponsored high value health plans (or &quot;Cadillac plans&quot;) that could raise premiums for many private consumers. 􀁸 Cuts in payment rates in public programs that could increase cost shifting to private sector businesses and consumers. These changes are expected to more than offset the potential reduction in cost shifting resulting from providing coverage to the uninsured. 􀁸 New taxes on health sector entities that are likely to be passed through to consumers. Collectively these provisions would raise the premiums for private health insurance coverage. The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated. 5 The 6 percent increase is consistent with the per capita growth rate in total health expenditures as detailed in the National Health Expenditure Accounts, Projected total health expenditures 2010 to 2018. The Blue Chip Consensus expects inflation to average 2.5 percent over the same period. 6 PwC has previously estimated that structural reforms, such as improved wellness and prevention, disease management, value based payment reform, improvements in health information technology, comparative effectiveness and malpractice reform, could mitigate growth in healthcare costs by between 0.5 and 1.0 percent per year after an initial investment period. See PricewaterhouseCoopers &quot;A Review of AHIP Savings Estimates&quot; in Appendix to AHIP, &quot;A Shared Responsibility,&quot; 2008. Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage E - 3 Chart 1: Average premiums for single coverage are estimated to be about $4,800 in 2010, will increase to approximately $8,200 in 2019 in the absence of reform and could increase to $9700 if these reforms become law.

<p>Cost of Private Health Insurance Coverage</p> <!--break--><p><img class="dada-image-center" src="http://rochester.indymedia.org/sites/default/files/migrate_dada/ppm116_pwc_report_on_costs_-_final_101109%5B1%5D.pdf" /><br /><br /> Introduction<br /> The health care reform debate has focused on three main issues: providing affordable coverage to the<br /> uninsured, promoting quality healthcare, and "bending the cost curve", or slowing the growth of<br /> healthcare spending. While complementary in some cases, these goals can also conflict. Efforts to<br /> increase coverage and promote quality could lead to a more efficient healthcare sector, but they could<br /> also lead to increased growth in costs if implemented without a full appreciation of the downstream impact<br /> on cost of health insurance coverage. Analyzing the overall impact of these reform efforts requires an<br /> evaluation from all perspectives. America's Health Insurance Plans engaged PricewaterhouseCoopers<br /> (PwC) to examine the potential impact of certain provisions of health reform bills on the cost of private<br /> health insurance coverage.<br /> Private healthcare costs are anticipated to grow over the next decade by approximately 6 percent per<br /> year under current law, which is more than double the expected growth in the Consumer Price Index of<br /> approximately 2.5 percent per year.5 Controlling the growth in these costs will require restructuring and<br /> realigning the incentives in the system.6 While the healthcare reform packages take steps in this<br /> direction, a major focus of the current legislation is on expanding insurance coverage. These reforms<br /> propose to make insurance more widespread by providing new subsidies for the uninsured and those with<br /> lower incomes.<br /> This report focuses on several key provisions that are part of current health reform proposals that would<br /> have a significant impact on the premiums for private health insurance coverage, including:<br /> 􀁸 Insurance market reforms and consumer protections that would raise health insurance<br /> premiums for individuals and families if the reforms are not coupled with an effective coverage<br /> requirement.<br /> 􀁸 An excise tax on employer-sponsored high value health plans (or "Cadillac plans") that could<br /> raise premiums for many private consumers.<br /> 􀁸 Cuts in payment rates in public programs that could increase cost shifting to private sector<br /> businesses and consumers. These changes are expected to more than offset the potential<br /> reduction in cost shifting resulting from providing coverage to the uninsured.<br /> 􀁸 New taxes on health sector entities that are likely to be passed through to consumers.<br /> Collectively these provisions would raise the premiums for private health insurance coverage.<br /> The reform packages under consideration have other provisions that we have not included in this<br /> analysis. We have not estimated the impact of the new subsidies on the net insurance cost to<br /> households. Also, if other provisions in health care reform are successful in lowering costs over the long<br /> term, those improvements would offset some of the impacts we have estimated.<br /> 5 The 6 percent increase is consistent with the per capita growth rate in total health expenditures as detailed in the<br /> National Health Expenditure Accounts, Projected total health expenditures 2010 to 2018. The Blue Chip Consensus<br /> expects inflation to average 2.5 percent over the same period.<br /> 6 PwC has previously estimated that structural reforms, such as improved wellness and prevention, disease<br /> management, value based payment reform, improvements in health information technology, comparative<br /> effectiveness and malpractice reform, could mitigate growth in healthcare costs by between 0.5 and 1.0 percent per<br /> year after an initial investment period. See PricewaterhouseCoopers "A Review of AHIP Savings Estimates" in<br /> Appendix to AHIP, "A Shared Responsibility," 2008.</p> <p>Potential Impact of Health Reform on the<br /> Cost of Private Health Insurance Coverage</p> <p>Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage<br /> E - 3<br /> Chart 1: Average premiums for single coverage are estimated to be about $4,800 in 2010, will<br /> increase to approximately $8,200 in 2019 in the absence of reform and could increase to $9700 if<br /> these reforms become law.</p>

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