A new study released Thursday by the nonprofit RAND Corporation estimates that consumers purchasing health insurance on the individual market will see little or no increase in their premiums when the Affordable Care Act is more fully implemented later this year.
"Our analysis shows that rates for policies in the individual market are likely to vary from state to state, with some experiencing increases and some experiencing decreases in cost," said Christine Eibner, lead author of the study and a senior economist at RAND. "But our analysis found no widespread trend toward sharply higher prices in the individual market."
The study used modeling to look at ten "representative states" as well as the country as a whole. In five of those ten states, RAND finds no increases when the costs of individual plans offered today is compared to cost estimates for comparable plans offered in the insurance exchanges opening on October 1. Consumers in three states -- Minnesota, North Dakota and Ohio -- could see their premiums increase by as much as 43 percent, while in the final two states -- Louisiana and New Mexico -- consumers could see their premiums decline. Nationwide, the study estimates that premiums will remain stable.
Under Obamacare, plans offered in the new insurance exchanges will be tiered based on their actuarial value -- or the percentage of health care costs that they cover. Due to heightened minimum coverage requirements, the lowest -- or bronze -- tier has a minimum actuarial value of 60 percent, which is significantly higher than many of the cheapest plans currently offered on the individual market.
This means that the government's new coverage mandates may force some consumers to pay more, but the law's supporters are quick to point out that they'll be purchasing much more comprehensive insurance.
None of the study's cost estimates take into account federal subsidies that will be available to help offset the cost of insurance for lower-income Americans. The study predicts that at least 60 percent of those entering the individual market in the ten states it analyzed will be eligible for federal assistance, and in South Carolina the number could be as high as 75 percent.
Additionally, the study found that the ACA could reduce the number of uninsured Americans by more than half if additional states take advantage of the federally-subsidized Medicaid expansion. Without the ACA, RAND estimates that roughly 20 percent of Americans would be uninsured in 2016, but if every state expanded access to Medicaid, that number could drop as low as 8 percent.
So far just 25 states have signed onto the Medicaid provision of Obamacare after that portion of the law was ruled optional by the Supreme Court. As there's no deadline to expand Medicaid eligibility, Obama administration officials are hoping that if the plan is successful in early-adopting states, the other half of the country will soon follow suit.
In calculating the effect that expanding Medicaid can have on the number of uninsured, RAND looked at three states -- Texas, Florida and Louisiana -- whose governors have chosen not to move forward with expansion. The study concludes that combined, an additional 2.3 million people will be without insurance because of the decision not to expand Medicaid, and the rates of uninsured in each state is estimated to increase by at least 5 percent.