With major provisions of the federal Affordable Care Act set to take effect in just a few months, misconceptions and misplaced fears about the law continue to circulate. Most of these fears center on alleged increases in costs due to the law’s provisions. But the truth is that most Louisianans who have health insurance will notice little or no change come Jan. 1. At the same time, many of their uninsured neighbors and local small businesses will gain access to affordable coverage.
Some critics of the law point to new taxes or fees levied on the health insurance industry, pharmaceutical companies and medical device manufacturers and claim they will drive up premiums substantially. But the Congressional Budget Office (CBO), the nonpartisan “scorekeeper” that studies federal policy, says the law will actually save money. Paul Van de Water with the Center on Budget & Policy Priorities sums up CBO’s position well:
“All things considered, CBO estimates that health reform will slightly reduce premiums for employer-sponsored health insurance in the near term. For employers with more than 50 workers, CBO estimates that the law will reduce average premiums by up to 3 percent in 2016, compared to where they would otherwise be. For small employers, the estimated change in premiums ranges from an increase of 1 percent to a reduction of 2 percent. For workers in firms that can benefit from the ACA’s tax credit for small employers, the cost of insurance will drop by 8 to 11 percent. These figures all take into account the effect of the health insurance tax.”
New fees on health insurers will be used to finance tax credits for middle-class families to help them buy coverage. These credits will offset any modest increases in premiums— and bring the industry millions of new customers (and revenues) in the process. The end result will be more affordable insurance options and fewer uninsured Louisianans.
Another criticism of Obamacare is that it will drive up rates by requiring everyone to buy “deluxe” insurance coverage. Again, this fear is exaggerated. The law requires insurance plans provide certain “essential benefits” such as hospitalization, prescription drugs and outpatient care. While the pejorative “deluxe” suggests something else, the essential benefits will help ensure that customers get a basic level of coverage. In many instances, this could protect patients from the unpleasant discovery that their plan doesn’t cover the care they need. In Louisiana, the essential benefits package will be based on a current Blue Cross Blue Shield plan.
If this ends up leading to higher premiums for some consumers, it will be because they are buying more comprehensive coverage that will protect them financially when they get sick — instead of bare-bones coverage with limits on care that leaves them open to financial ruin.
The reality is health-care premiums were rising sharply for years before health care reform was even debated, but recently costs have been climbing at the slowest rate in almost two decades. The new law will protect middle-income consumers from these premium increases through tax credits, and aims to increase competition among health insurers through creating state-based marketplaces. New consumer protections will ensure premiums are being spent on health care, and not on administrative costs and other overhead. The result is real savings for consumers. Thousands of Louisianans have already received rebates due to the law.
The bottom line is the Affordable Care Act will increase access to affordable and comprehensive health coverage for uninsured Louisianans, and help reduce premiums for many families and small businesses. The law especially offers hope to the hundreds of thousands of Louisianans of all ages who can be denied coverage today because they have a pre-existing condition, but who will now have the chance to choose a health insurance plan that works for them.