PPACA: The Battle of the Projections

With over 1,000 (likely over 2,000) clauses that revolve around the Secretary, it  is so hard to pin down the facts about PPACA.  This article does a good job of breaking down the he said / she said of Obamacare.  I’ve tried to highlight some key arguments.

By Arthur D. Postal and Allison Bell

WASHINGTON BUREAU – Health insurers and the Obama administration are clashing over the future effects of the Affordable Care Act on health insurance premiums and out-of-pocket health care costs.

The Affordable Care Act is the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA). Republicans in Congress have been trying to repeal the act or block implementation.


Assuming the Affordable Care Act takes effect as written, a family of 4 with $33,525 in annual household income could save as much as $14,900 per year on premiums and out-of-pocket costs starting in 2014, officials at the U.S. Department of Health and Human Services (HHS), say in a new analysis.

A relatively high-income family of 4 with an income of $89,400 could save about $3,800 per year, and a small business could save $350 per year per family policy, officials say.

Individuals and families will get savings both from “affordability” tax credits and cost-sharing reductions, and small businesses already are eligible for Affordable Care Act tax credits for up to 35% of their premiums, officials say.

The tax credits could pay up to 50% of some small businesses’ health premiums in 2014, officials say.

These projected savings “are in sharp contrast to the rising insurance costs families and businesses have experienced over the previous decade,” HHS Secretary Kathleen Sebelius says in a statement about the analysis.

Premiums more than doubled from 1999 to 2009, and total costs have risen by more than $7,500 for the average family that gets insurance through an employer, Sebelius says.

“The high cost of health care made it difficult for many small businesses to offer insurance to their workers,” Sebelius says, adding that the percentage of small employers offering health insurance dropped to 59% in 2009, from 65% in 1999.


America’s Health Insurance Plans (AHIP), Washington, says HHS analysts have overstated the cost savings associated with some Affordable Care provisions and ignored the cost increases that likely will be caused by other provisions.

“While tax credits are important to help people pay for coverage, tax credits do not bring down the growth of medical costs or reduce health insurance premiums,” AHIP President Karen Ignagni says in a statement.

Premiums already are rising because underlying medical costs continue to soar, new benefits mandates are further increasing claims costs, and younger and healthier people are dropping coverage due to the high cost of coverage and the effects of a weak economy on personal income, Ignagni says.

Affordable Care Act provisions that seem likely to increase costs further include a new premium tax, age rating restrictions, and benefit mandates, Ignagni says.

The new Affordable Care Act health insurance premium tax “means that American families will pay as much as $135 billion more in insurance premiums over the next 10 years,” Ignagni says.

The new restrictions on rates charged for older insureds may cut coverage costs for those insureds, but the restrictions will increase costs for younger, healthier people, Ignagni says.

The Congressional Budget Office (CBO) estimated in November 2009 that a new “essential benefits” mandate could increase individual and family premiums 27% to 30%, Ignagni says.

The CBO has predicted that other factors, such as an increasing number of healthy people with individual health coverage, could hold the total individual and family health insurance cost increase to 10% to 13%.

House Ways and Means Committee Chairman Dave Camp, R-Mich., says Medicare actuaries have suggested that the Affordable Care Act could increase health care spending about $300 billion over 10 years. The CBO has suggested that the act could increase premiums by about 13%, Camp says.


In November 2009, the CBO analysts said the Affordable Care Act could increase health insurance premium costs 10% to 13% in the nongroup market, before subsidies.

About 57% of nongroup health insurance buyers would get subsidies, and their premium costs would be an average of 56% to 57% lower than their costs would be without the act, the analysts predicted.

For unsubsidized small groups, the act could increase premium costs as much as 1% or lower them as much as 2%, the analysts predicted.

For large groups, the act might have no effect on premium costs and could lower costs as much as 3%, the analysts predicted.

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