National Expert on WI Health Insurance Rates Says Value of Wisconsin Insurance Will be Increased by Reform
MIT economist Jonathan Gruber predicts impact on consumers will be positive.
Statewide - On a media call Friday afternoon (recording available here) Citizen Action of Wisconsin and MIT health economist Jonathan Gruber, a leading expert on health economics and actuarial science, debunked scare tactics about health insurance premium rate hikes and explained how the soon to be released Wisconsin rates on the new competitive health insurance marketplace will benefit Wisconsin consumers.
Unlike many other states, the Walker Administration has yet to release the new health insurance rates in the marketplace set to begin enrollment on October 1st. According to the Office of the Insurance Commissioner, Wisconsin rates will be released this month.
Some states that have released rates have failed to report the true sticker price of insurance coverage purchased on the new marketplaces. It is misleading to only report average rates and ignore the generous tax premium tax credits which will reduce the consumer impact. A report from the Kaiser Family Foundation shows that nearly half of consumers on the new health insurance marketplaces will receive tax credits which will on average a reduce the sticker price of a family plan at the silver level by 32% (or $2,672). The subsidies would reduce the cost of a bronze plan by 77%.
“Threats of rate shock are overblown. Currently only 3% of Wisconsin population purchase individual insurance. That’s who we’re talking about. Our estimates are that there will be no or negligible premium impact on employer coverage, the main form of coverage in Wisconsin,” said Jonathan Gruber, MIT economist who wrote the definitive report on the Affordable Care Act’s impact on Wisconsin. “Pointing to the insurance rates but not looking at the reductions because of premium tax credits and insurance rebates is like looking at the price of a car and not at the price after negotiating. Almost no one pays that initial price.”
Dr Gruber’s research estimated that while many on the individual market will see rate increases, after tax credits and rebates average insurance premiums will fall, not rise. For those individuals who have experienced insurance discrimination such as denials or higher rates: including those with pre-existing conditions, women and the older adults, insurance premiums will fall dramatically.
“Looking at rates without looking at the full sticker-price after premium tax credits is highly misleading”, said Robert Kraig, executive director of Citizen Action of Wisconsin. “The current system is based on discrimination against people with pre-existing conditions, women, and older adults. Even so-called ‘young invincibles’ will age, they will get sick. This law will protect them.”
“An exclusive focus on premium rates does not reflect total consumer cost,” Kraig continued. “The Affordable Care Act establishes quality standards for insurance plans. While this may increase premiums in some cases where the consumer currently has substandard coverage, higher quality coverage has lower out-of-pocket costs for consumers when they get medical care. In addition, average premiums do not tell the whole story because rates that are low today are a product of a system that discriminates against people with pre-existing conditions and against women. Rates will go down for people who are older, people with health conditions, and for women. In addition, many who are denied coverage or cannot afford discriminatory rates will be able to buy coverage.”
Audio recording of the media call is below.