Insurance industry warns of higher rates, as ObamaCare supporters see long-term fix

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Published June 28, 2012

| FoxNews.com

President Obama says the health care law makes coverage more affordable, but the insurance industry reacted to the Supreme Court decision by saying that the ruling will actually end up raising rates even more than they have climbed since the law was enacted.

America’s Health Insurance Plans, the industry’s lobby group, issued a statement supporting expanding health care coverage to millions of Americans, but it said, “major provisions, such as the premium tax, will have unintended consequences of raising costs and disrupting coverage unless they are addressed.”

The group's CEO, Karen Ignagni, told Fox News that because of the increased costs, “It's time for people to roll up their sleeves and look very carefully at those provisions.”

The Kaiser Family Foundation, a nonprofit research group, has said that the average family insurance premium in 2011 topped $15,000 -- a 9 percent increase from the year before, while premiums had climbed just 3 percent a year before the law went into effect.

AETNA, the nation's fourth largest insurer, says its polices increased from 1 to 2 percent.

"Three percent is a material increase," said Ignagni, who cited the legislation's premium tax. "That is one example of provision embedded in the legislation that will work in the wrong direction than consumer expectations.”

But others claimed the law eventually will lower insurance premiums because of the large pool of Americans who will be covered. The group FamilesUSA called the decision, "a clear, unambiguous and complete victory for long-overdue health care reform."

The group also cited the creation of state health insurance exchanges, which will give consumers choices of insurance plans.  It also said the new insurance company regulations help consumers.

"No one will be denied health coverage or charged a discriminatory premium due to a pre-existing condition, such as children with asthma or diabetes ... People with major health problems, like those in car accidents, will be protected against arbitrary lifetime or annual limits in how much insurance companies will pay for needed care," the group said.

"The premiums paid for family health care rise by more than a thousand dollars simply to pay for the costs that have not been paid by the uninsured," Ron Pollack, the executive director of FamliesUSA, told Fox News. "So as those people get coverage, our premiums will go down."

Pollack added, “Anybody who tells us that health reform is unaffordable is smoking something, because of the heart of health reform is to make our system a whole lot more efficient and effective. And when you make it more efficient and effective, it helps to bring premiums down.”

AHIP counters claims that premiums will decrease. It cited an Urban Institute study that shows insurance premiums for singles policyholders, who are 18 to 34 years old, will increase by $1,400, from $3,600 to $5,000 a year.

Policyholders who are 35 to 44 years old will see a lesser increase, by $800 -- from $4,200 to the same $5,000 rate per year.

"We are weighing these issues, talking about solutions and making sure that between now and Jan. 1, 2014, that the costs are actually affordable," the industry lobby group said.

Some studies have shown that rates could have shot up even more if the law had been tossed out. Some estimates had pegged the possible increases in insurance costs from 10 percent to 30 percent.

But the uncertainty of the decision has already had a negative impact on insurance companies. Many of  their stock prices dropped sharply Thursday.

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http://www.foxnews.com/politics/2012/06/28/health-care-law-and-insurance-rates/