Actuaries Foresee Double-Digit Insurance Increase, Modest Boost in Spending for Healthcare Services

A newly released study from the Society of Actuaries is receiving national media attention for its findings that Americans will see double-digit increases for health insurance premiums thanks to the Patient Protection and Affordable Care Act. But what does the study say about healthcare providers?

Reading between the lines of the report–”Cost of the Future Newly Insured under the Affordable Care Act (ACA)”–there is, as expected, good news and bad news for healthcare providers, if the projections by the actuaries actually occur. Among the conclusions:

The percentage of uninsured will decrease by almost 60 percent. The actuaries found that the percentage of Americans currently uninsured (estimated 16.6 percent) will fall to between 6.6 and 6.8 percent, once health insurance exchanges go online and penalties for not have health insurance kick in. As the self-pay population represent the source of most bad debt, this is great news.

Those not covered by employer or member plans will see healthcare premiums increase by an average of 32 percent. The actuaries believe that the cost of covering the currently uninsured or the uninsurable (such as those with pre-existing or chronic conditions) will outstrip the savings resulting from providing coverage to the young and healthy.

Spending for healthcare services will increase. By expanding the pool of the insured, spending overall for healthcare services will increase, although not as dramatically as one might expect. The actuaries report examines the impact of healthcare reform on Wisconsin and found that spending on healthcare by the newly insured is projected to increase by 2 percent.

Newly insured will create initial rush for physicians, not hospitals. Because most of the uninsured are relatively young and healthy, the report concludes that the patient population has put off seeing a physician, but not necessarily put off having in-patient treatment. The authors of the study write:

We assume that uninsured people who become covered under a coverage expansions proposal would use health care services at the same rate reported by currently insured people with similar age, sex, income and health status characteristics. This assumption encompasses two important effects. First, the increase in access to primary care for this population would result in savings due to a reduction in preventable emergency room visits and hospitalizations. Second, there would be a general increase in the use of elective services such as primary care, corrective orthopedic surgery, advanced diagnostic tests, and other care that the uninsured either forego or delay.