Letter to the Editor: Fallacy of 'No Rate Increase, Study Predicts'
In your Aug. 30 article, “No Rate Increase, Study Predicts,” you appear to have reached your conclusion simply by oversimplifying. The RAND study you quote states the following:
“In analyses that held age, actuarial value, and tobacco use constant, we estimated that, for five of the ten states we examined (Florida, Kansas, Pennsylvania, South Carolina, and Texas), and for the United States overall, the law causes no change in premiums.”
This seems to be the source of your article’s title. To understand this, it’s important to understand what is “being held constant.” This prior sentence gives us a clue to “actuarial value”:
“The law’s requirement that individuals obtain plans with a minimum actuarial value will cause some enrollees to shift from less-generous into more-generous plans, which could result in higher premiums but also more-comprehensive coverage.”
Though understated in the above quote, the ACA adds some very costly requirement--including the elimination of lifetime caps and extended family coverage for adult students--which will greatly increase the actuarial value of policies. It seems quite far from certain that ACA will truly achieve its stated goal of making care more affordable in spite of its costly requirements. Regardless of whether ACA increases or decreases cost (actuarial value), it appears the RAND study is making no such claim.
By comparing insurance costs with and without ACA in analyses that hold actuarial value constant, it’s not really considering whether there will be a rate increase. Instead it’s looking at how much we would have paid before to get the ACA-mandated coverage in comparison to future cost for ACA-mandated coverage. It’s probably fair to say that a very small portion of the insured population—maybe no one—had that. So, if they bought less coverage before and have to buy more coverage after, there’s a fairly high certainly they’ll spend more to get it.
You referenced “an apples-to-apples comparison." In this case the comparison is between a shiny new apple and an apple that didn’t exist before. Those of us who do pay insurance premiums are not concerned with the premiums we didn’t pay, nor with a comparison of those premiums to future premiums we will have to pay. Instead we are concerned with those we did pay in comparison to those we will pay. For this premium-paying portion of your audience, the point made in your headline is precisely false.
--Bill Voltmer is a software developer and consultant from Pompano Beach. Please direct questions or comments to Health News Florida Editor Carol Gentry by email or phone: 813-974-8629.