Affordable care?
Insurers take one more squeeze
This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

The Affordable Care Act became the law of the land in 2010. Health insurance premiums shot up 9 percent in 2011. That's the sharpest hike in six years, triple the rate of overall inflation and more than four times the rate at which workers' earnings are going up.

More businesses are offering plans that require a greater contribution from employees and offer fewer benefits with higher deductibles and co-pays. Employers feel no pressure to do otherwise in an economy where nobody has the option of finding another job with better benefits.

So where, skeptics of President Obama's signature domestic initiative might well ask, is the affordable part?

Valid question. Complicated answer.

Parsing the annual report on employer-provided health care costs from the non-partisan experts at the Kaiser Family Foundation reveals that, out of the 9 percent rise in annual premium costs, 1 or 2 percentage points are attributable to provisions of the ACA.

Those provisions include the rule that insurance plans cover the children of policy-holders up to age 26 and requirements that more preventive care be made available at no cost to the patient. Those are the kinds of rules that make health insurance available to more people, especially in a perpetually high-unemployment economy, and make that insurance worth what it costs, both by providing more service and by providing more of the service that spends a dollar now to avoid having to spend thousands of dollars later.

Less directly tied to the ACA, though fair game for criticism, is the indication that insurance companies are raising rates more than they need to now — health care costs are down and insurance company profits are up — because they know that, starting next year, big hikes will be harder to get.

Starting in 2012, any insurance company that wants to raise the premiums for any plan by more than 10 percent will have to explain why the hike is necessary, and many states will acquire the power to limit any rate hikes that cannot be justified. Also, under the ACA, most insurance providers will have to demonstrate that they are spending at least 80 percent of their revenue actually paying for people's health care, rather than overhead, profits and corporate bonuses.

And insurers who now have the market to themselves in many areas will have to start competing in the state exchanges the ACA creates — what more conservative states such as Utah have favored all along.

Bottom line: The health insurance companies want one more big squeeze of the turnip before the ACA limits their ability to take more than they give.