Unaffordable: Impact of Obamacare on Americans’ Health Insurance Premiums

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Hearing Description:

The Energy and Commerce Committee held hearings on how exactly health insurance premiums would be affected by the Affordable Healthcare Act (ACA). In a partisan split, some witnesses believed the provisions of the ACA would cause premiums to go down while other witnesses believed there would be significant upward pressure on premiums.

Hearing Date: March 15th, 2013

Hearing Summary:

The Energy and Commerce Health Subcommittee recently met to discuss in what way health insurance premiums would change for Americans following the institution of the Affordable Healthcare Act next year. Chariman Joe Pitts (R-Penn.) used his opening statement to unabashedly critique the Affordable Healthcare Act and the unintended consequences it will have on insurance premiums. Rep. Henry Waxman (D-Ca.) declared that Republicans are forgetting about the broken healthcare system prior to the passing of the ACA and cited statistics showing the law will ultimately lower healthcare insurance premiums for Americans. Rep. Michael Burgess (R-TX) said the problem with the ACA was not the implementation of the law, but the administration of it. He continued, saying insurers would raise premiums to compensate for the mandated regulations and controls set forth by the new healthcare laws. In his opening statement, Rep. Phil Gingrey stated lowering insurance premiums for young people should not be a partisan issue, and he will do whatever it takes to see that certain provisions in the ACA be repealed.

The first witness, Douglas Holtz-Eakin, Former Director at the Congressional Budget Office, said in his opening statement the provisions mandated by ACA will ultimately force insurers to raise insurance premiums. Younger Americans will face the brunt of the higher premiums, unless they do not buy insurance in which case, that would remove the healthiest individuals from the risk pool.

The second witness, Wendell Porter, a Senior Analyst at the Center for Public Integrity spoke of his prior experience working with healthcare insurance companies, implementing deceptive PR campaigns to make Americans believe healthcare reform would do more harm than good. It is his belief if some or all of ACA is repealed, insurance companies will continue price-gouging older Americans and underinsuring young ones.

The third witness, Christopher Carlson, Consulting Actuary at Oliver Wyman testified that in some cases, insurance premiums will go up for people ages 21-29 as much as 42%. He added that with the beginning of the ACA, there will be a premium tax imposed on insurers and his group expects insurance premiums to rise to offset those new taxes. By eliminating the new premium fee, it could save an average American family $400 dollars in 2016.

In response to questioning, Christopher Carlson stated:

  • “Guaranteed Issues” will increase insurance premiums in most respects
  • New provisions in the ACA (like fees and taxes) will be passed onto the consumer
  • There is a bit of subsidy going on from the younger generation to the older generation

In response to questioning, Douglas Holtz-Eakin stated:

  • Premium increases in the individual’s markets will be “dramatic”
  • The ACA will not allow new taxes/fees to be deductible, thus driving premiums higher
  • The government insurance system is going broke
  • There are many economic incentives for small employers to send their employees to health insurance exchanges

In response to questioning, Wendell Porter stated:

  • Women’s premiums will go down because of the ACA
  • The insurance industry spends a sizable amount of their premium dollars on PR campaigns
  • There is not a connection between rising health costs in Massachusetts and that state’s “beta version of Obamacare”
  • The ACA will change the culture of the insurance business for the better
  • The ACA will allow consumers to be much better informed of their coverage

Hearing Website: http://energycommerce.house.gov/hearing/unaffordable-impact-obamacare-americans’-health-insurance-premiums

Links to Testimony:

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