ACA premiums overstated, study finds

Premium rate increases predicted under the Affordable Care Act may have been wildly overstated, according to new study from the Rand Corp., which found average premiums in Ohio would actually decline after accounting for tax credits included in the ACA.

Ohio was among 10 states where Rand — an Arlington, Va.-based think-tank — studied proposed insurance rates for individual health plans to be sold on state-based health exchanges created under the ACA.

The study, done for the U.S. Department of Health and Human Services, found average premium costs for individual health plans sold on Ohio’s exchange would fall 21 percent in 2016 compared to health plans sold without premium subsidies.

Results varied by state, and researchers were quick to point out that the cost of policies in the individual market will also vary based such factors as an individual’s age and whether they smoke.

But there was no indication of widespread premium increases across the country, said Christine Eibner, the study’s lead author and a senior economist at RAND.

“Our analysis shows that rates for policies in the individual market are likely to vary from state to state, with some experiencing increases and some experiencing decreases in cost,” Eibner said. “But our analysis found no widespread trend toward sharply higher prices in the individual market.”

Before subsidies are factored in, premium costs for individual policies sold on Ohio’s health exchange would average $5,312 a year in 2016, according to Rand. But $2,181 of the the average premium cost would be paid through federal tax credits — bringing the actual average cost to $3,131.

Earlier this summer, the Ohio Department of Insurance warned of an average 41 percent increase in insurance premiums under the ACA. But the ODI forecast did not include the tax credit subsidies that will be available 67 percent of exchange enrollees in Ohio, Rand found.

In addition to the cost savings, the ACA will result in a decline in the number of uninsured nonelderly people in Ohio.

By 2016, 9.9 percent of Ohio’s non-elderly population will be enrolled in health plan through the exchanges, the study estimated.

Nearly 63 percent of those expected to enroll in Ohio would not have had insurance without the Affordable Care Act, Rand said, noting that about 15 percent of the population — or about 1.5 million Ohioans — are now uninsured. That figure will drop to 6.2 percent by 2016, the study found.

Researchers said they estimated costs for insurance for 2016 to allow time for the government to work out bugs in the enrollment process for health exchanges, which begins Oct. 1 with coverage beginning in January next year.