TALLAHASSEE, Fla. (AP) -- Medical claims costs — the biggest driver of health insurance premiums — could jump more than 20 percent for Floridian's individual policies under the federal health overhaul, according to a study by the nation's leading group of financial risk analysts.
Uncertainty over costs associated with the Affordable Care Act has been a major concern among Florida's GOP-controlled Legislature. The study by the Society of Actuaries comes as lawmakers are still trying to decide whether they will offer health coverage to an expanded Medicaid population and how they will draft state insurance regulations to conform with the federal health law.
Another study released Tuesday estimated that more than 1.7 million Floridians would be eligible for tax credits to help pay for private insurance under the state exchanges, according to Families USA, an advocacy group supporting the health care law.
But the actuaries' estimated costs will rise because spending on sicker people and other high-cost groups will overwhelm an influx of younger, healthier people into the program. The report does not project medical claim costs for employer-sponsored plans, which cover the majority of workers
House and Senate committees recently voted against expanding Medicaid coverage to more than 1 million Floridians, worrying the federal government wouldn't live up to its promise to pay for 100 percent of the bill for the first three years and 90 percent after that. Republican Sen. Joe Negron has instead proposed a voucher plan that would use those federal dollars to help residents purchase private insurance, but it's unclear whether the House will be receptive to that plan.
If Florida lawmakers do not expand Medicaid or offer some type of alternative coverage to that population the study estimates a 22 percent increase in medical costs for individual coverage under the Affordable Care Act by 2017. If the state does expand Medicaid, the analysis predicts a 26 percent increase, according to recently released estimates by the Society of Actuaries to its members.
"The certainty of dramatic increases in premiums is one of the least recognized and discussed aspects of the Affordable Care Act and it's one of the reasons (Senate President Don) Gaetz and I have been so cautious and circumspect in developing our budget," said Sen. Joe Negron, a Stuart Republican, who chaired a committee overseeing implementation of the federal health law.
The other major portion of the federal health law sets up state health exchanges, an online marketplace where individuals and small businesses can browse different health plans from private providers and see if they qualify for federal subsidies to help pay for the plans. Low-income people will be steered to Medicaid and other safety net programs.
The study from the Society of Actuaries concluded the overwhelming majority will see double-digit increases when purchasing coverage directly from insurers.
By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said.
The report did not make similar estimates for employer plans, the mainstay for workers and their families. That's because the primary impact of Obama's law is on people who don't have coverage through their jobs.
Sen. David Simmons and other Republican lawmakers worry that if the state does not offer some type of alternative Medicaid plan, then the increased health costs will be passed onto small businesses. One of the provisions of the Affordable Care Act requires business with 50 or more employees to offer health coverage.
House Democratic leaders said they will review the study but haven't changed their position on the federal health law.
"Florida House Democratic Caucus members are aware that there are new costs associated with expanding health coverage to another 1 million Floridians and that there are billions of available federal dollars to help provide the care. House Democratic Caucus members recognize that an expansion of health coverage will create high-paying jobs, be good for Florida's economy, and will improve health outcomes for hundreds of thousands of Floridians," said Mark Hollis, spokesman for House Democratic Leader Perry Thurston, D-Fort Lauderdale.
Both chambers of the state Legislature have also signaled they will offer health coverage to the state's part time employees rather than face a $318 million penalty.
"We've budgeted for that but it's one reason I think it's important for us to have significant reserves because we just don't know the costs," Negron said.
Gov. Rick Scott did an about-face recently when he announced he supported expanding Medicaid, calling it a "compassionate" and "common sense" decision, but he has also said he's open to hearing alternatives brewing in the Legislature.
In Tallahassee, Jim Stanfield and his wife absorbed a $72-per-month increase in their health insurance costs, starting in January, for his Medicare supplemental coverage and his wife's individual plan.
"Nobody wants to pay more," said the 70-year-old Stanfield, who still dabbles in business and legal consulting work. "It's pretty clear that medical costs rise higher than almost everything else. Gaining some control over those costs would be a good thing."
But Stanfield said he fears the federal health-care law won't achieve that.
Greg Mellowe, policy director for the health advocacy group Florida CHAIN, contended that many of the state's most economically vulnerable residents would be largely immune from big premium increases.
"For the countless low- and moderate-income Floridians who have inadequate or unaffordable coverage through the individual market now ... their costs will not be affected, even if the study is correct," he said in a statement.
They would be eligible for tax credits that limit their premiums to "an affordable percentage of their incomes," he said. There are also caps on out-of-pocket costs and, for some, subsidies to reduce the cost-sharing even further, he said.
Florida hospital executives noted that insurance claims will obviously increase if the state expands coverage to more than 1 million residents, but stressed that those same residents were still generating medical claims before the Affordable Care Act. They were just getting uncompensated care in expensive places such as hospitals and emergency rooms — costs that didn't go through private insurance companies, said Florida Hospital Association President Bruce Rueben.
Florida hospitals have lobbied hard for the state to expand Medicaid or to find an alternative plan to drawn down an estimated $51 billion in federal dollars over the next decade, saying they will be hit doubly hard otherwise because federal funding streams that hospitals rely on to treat uninsured patients will dry up.
Kennedy reported from Miami.
- Health Care Policy
- Society of Actuaries