Senate Democrats Bash Blue Cross' Health Reform Report

John Commins, for HealthLeaders Media , December 4, 2009

Senate Democrats are dismissing as "deception and distortion" a new health insurance industry study that alleges that the cost of premiums in the individual market would increase by 54% if healthcare reform passes.

"As Senate Democrats move closer to fixing our broken health system, the insurance industry continues their ‘say anything' strategy to deceive the public," said Jim Manley, spokesman for Senate Majority Leader Harry Reid of Nevada.

"So far, all we've gotten from the defenders of our broken health system is a series of misleading reports, scare tactics and an obstruction manual. They still have no plan to fix our broken system, no plan to curb the abuses within the insurance industry, and no plan to combat skyrocketing healthcare costs," Manley said in a media release. "These insurers and their defenders are scrambling to stand in the way of progress. But their campaign of deception and distortion will not derail our efforts because Americans' strong desire for reform grows with each passing day."

Manley was responding to a new actuarial analysis commissioned by the Blue Cross and Blue Shield Association, which stated that average annual medical claims in the new individual market will be 54% higher than they are today five years after implementation of the Patient Protection and Affordable Care Act.

The increase would translate into premiums for people purchasing new policies of $4,561 for single coverage and $9,669 for family coverage in today's dollars—representing premium increases of $1,576 and $3,341, respectively.

The study, conducted by Oliver Wyman, Inc., attributes the increases in costs for individuals to the inclusion of new guarantee issue rules without stronger coverage mandates.

"This means that many people are likely to wait to purchase coverage until they need it, raising premiums for everyone. Without a stronger coverage mechanism, and other changes to improve affordability, coverage levels are unlikely to reach more than 91% of the population," according to the report.

"Healthcare reform cannot be considered successful if it makes coverage more expensive," said Scott P. Serota, BCBSA president/CEO. "This analysis illustrates that is exactly what will happen if new insurance market reforms in the individual market are not paired with effective mechanisms to ensure broad participation in the market, as well as with sensible discounts for young people."

The analysis also found that premiums for the youngest 30% of the population, who are needed to help pay into a health insurance system that accepts more Americans, will increase by 35% as a direct result of the 3:1 age band included in PPACA.

"Significantly restricting age discounts coupled with a weak mandate will cause young people—who are critical to providing cross subsidies—to forgo coverage resulting in higher premiums for everyone," said Kurt Giesa, director, Oliver Wyman, Inc.

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