Will the Healthcare Law Increase Your Costs?

Under the sweeping Affordable Care Act (ACA), which passed in 2010 and was upheld by the Supreme Court last year, the healthcare system in the United States will be overhauled and millions of uninsured Americans will become covered.

The ACA has numerous provisions -- some that have already taken effect and some major changes scheduled to kick in next year. Among the provisions are:

• Restricting insurance companies from denying coverage, excluding individuals with pre-existing conditions, or charging more based on a person's health status.
• Creating state health insurance exchanges that will cover uninsured individuals and those currently covered under state high-risk pools.
• Requiring large employers to offer health coverage to full-time employees or be charged a penalty.
• Imposing a tax penalty on individuals who do not buy sufficient health insurance coverage.

How will the ACA affect your individual healthcare costs -- and the cost for employers providing healthcare coverage? Recently, some predictions were made in a new study published by the Society of Actuaries, a professional, educational and research organization.

The study, which focused on the individual (non-group) market, predicted that by 2017, insurance companies will have to pay an average of 32 percent more for health coverage claims on individual polices. The increased costs will come from the changes in composition of the people being covered by insurance.

Those increased costs could be passed on to certain parties in the form of higher premiums.

Other predictions from the study, titled "Cost of the Future Newly Insured under the Affordable Care Act:"

- Moving from the group market to the individual market - A significant number of people currently insured through state-sponsored high-risk pools or through the temporary Pre-Existing Condition Insurance Plan high-risk program will move into the individual market. In other words, more sick people will be covered. In states that operate a high-risk pool, the impact of these higher-cost individuals has been spread over a wider pool through approaches that vary by state.

"Under the ACA, the impact of these members' higher costs will be concentrated in the individual market," the Society of Actuaries study states.

- Employer coverage - A number of people currently insured under employer-offered plans will move to the individual market, either because employers stop offering coverage or because the people perceive more value in the individual market than in their employer-provided plan. According to the Society of Actuaries research, even small shifts from the employer-provided market will have a significant effect on costs in the much smaller individual market.

- The individual market size - Currently, most people don't buy insurance as individuals. But the size of the individual market will more than double, the study predicts, driven in part by people who are below 200 percent of the federal poverty line coming into the market. "This group of people are considered to be 'good risks' and are generally expected to bring down average costs. But other changes in composition of the individual market will drive average costs up," the Society of Actuaries states.

Specifically, shifts of currently insured people from high-risk pools, the employer market, and previously uninsured persons who must pay for individual market coverage, "will overwhelm the expected lower costs anticipated by the influx of newly-insured persons in the exchanges receiving federal benefit and premium subsidies," according to the Society of Actuaries.

As a result, the underlying claims cost of insurance in the individual market will increase by an average of 32 percent nationally, when compared to what it would have been without the reform law.

- State differences - The change in individual market costs will vary substantially across state lines. This can be attributed to factors including whether the state has a high-risk pool, demographic/ income differences in populations and underwriting practices.

States that are currently low cost could see increases of up to 80 percent, while states that are now high cost could see double digit decreases.

Top Five State Increases
Ohio	80.9 percent
Wisconsin	80 percent
Indiana	67.6 percent
Maryland	66.6 percent
Idaho	62.2 percent
Top Five State Decreases
New York	13.9 percent
Massachusetts	12.8 percent
Vermont	12.5 percent
Rhode Island	6.6 percent
New Jersey	1.4 percent

Note: After the study was released, White House officials disputed its findings stating that it was speculative and didn't address all financial aspects of the law. In response, a Society of Actuaries spokesperson said the study did not attempt to address all factors affecting cost increases. The goal was to look at claims -- described as the "most important driver of health care premiums."