Obamacare Already Helping Check Insurance Costs and Expand Coverage

This is the meme on the right wing media noise machine, joined in unison by the Left puritan, public-option-or-bust armchair activists. The claim is that President Obama's health reform has failed - FAILED - to contain the exploding cost of health care and health insurance. Never mind the pure absurdity of that argument being raised before the premium subsidies, exchanges and the individual mandate has a chance to take effect in 2014. The rah-rah yelling and screaming sensationalizes announcements from insurance companies of big raises in rates, but fail to correct the story-line when those same insurers pare down those rates.

That's happening right now, as both the Fox media empire on the Right and the Faux-gressives on the Left fail to tell you. Especially in cases where state regulators have started taking advantage of the new law's provisions that allow them to hold insurance companies accountable and ask for justifications of arbitrary rate hikes. California exercised that option, and here is the result:
WellPoint's Anthem Blue Cross unit in California has reduced its proposed rate increase [in the individual market] to an average of 9.1% from the previous proposal to an increase of 16.4%. Further, WellPoint’s new rate increase of 9.1% will go into effect on July 1, from the previously proposed April 1, and it will delay increases in deductible and co-pays until January 1, 2012.

Consequently, the decreased rate hike will save about $40 million, effecting about 600,000 individual and family policyholders in California.
Is 9.1% average increase effective July 1 still a pretty hefty one? You bet. But it's far better than the 16.4% increase effective April 1 that they proposed earlier and that - you guessed it - got covered by the sensationalized media online and off. Deductible and co-pay increases won't even take effect in California until next year.

In addition to Anthem Blue Cross postponing rate hikes for 600,000 Californians, Blue Shield of California has backed down from rate increases for the rest of this year altogether. This is potentially even more stunning, given that according to the California Insurance Commissioner's estimate, Blue Shield was planning to increase rates as much as 59%.
Nonprofit health insurer Blue Shield of California has withdrawn its rate filing with the state's insurance department and said Wednesday it won't increase rates to any individual or family-plan member for the rest of the year.

The insurer, which has 340,000 individual- and family-plan members in the state, had been criticized by California's insurance commissioner early this year for planning "excessive" premium increases on individual policies and, in response, submitted its rates to an independent review. [...]

Blue Shield had filed late last year for new individual rates, which were to have been effective March 1. New Insurance Commissioner Dave Jones in January asked Blue Shield and the three largest for-profit U.S. health insurers--WellPoint Inc. (WLP), UnitedHealth Group Inc. (UNH) and Aetna Inc. (AET)--to delay their new rates in the state by at least 60 days. The insurers did so, although Blue Shield didn't initially agree.

Jones had said some Blue Shield consumers would see a 59% rate increase under the filing.
This is happening in part because of Commissioner Jones' insistance that the 80% Medical Loss Ratio requirement will be enforced in the state of California with a pretty strong regulatory framework. That MLR, you understand, was put in place by the national health reform law. That alone now may be responsible for sparing 340,000 individuals and families from being priced out of the health insurance market. And yet, did you hear this credit being given where it's due? I sure didn't from the whiners on the Left and the screamers on the Right.

California is of course not the only place where this is happening. NPR's Martha Bebinger of Boston presents this handy chart comparing 2010 and 2011 the rate increases in Massachusetts . Note how significantly lower the rate increases are this year than last in most cases, and how not in a single case is it higher:
MA Small groups health insurance increase 2011
Bending the cost curve in the right direction? I'd say so.

Not only is the new health care law helping state officials hold insurance companies accountable in the individual market, thanks to the 35% tax credit for small businesses, the small group market has taken off, as a surging number of small businesses - the source of by far the most new jobs in this country - start to provide health insurance benefits for their employees:
In the six months after the law was signed in March, UnitedHealth Group Inc., the country's largest insurer, added 75,000 new customers who work for companies with fewer than 50 employees. The Minnesota company called the increase notable but declined to reveal further details.

Coventry Health Care Inc., an insurer in Maryland that focuses on small businesses, signed contracts to cover 115,000 new workers in the first nine months of this year, an 8 percent jump.

In California, Warner Pacific Insurance Services, a major servicer of insurance brokers, has seen business grow more than 10 percent this year, a company executive said.

And Blue Cross Blue Shield of Kansas City, the largest insurer in the Kansas City, Mo., area, is reporting a 58 percent jump in the number of small businesses buying insurance since April, the first full month after the legislation was signed into law
The Democrats in the House Small Business committee released a report showing the benefits for small business, both in terms of cost and coverage:
  • As many as 6.7 million firms will be eligible to claim the tax credit.
  • The healthcare credit provides tax relief in the amount of $40 billion for entrepreneurs.
  • The tax credit will bring the cost of health care coverage back down to 2003 levels.
  • For eligible small businesses, it holds the potential to reduce the annual out-of-pocket costs for each employee's health insurance costs by $3,500.
  • As many as 650,000 firms have begun offering coverage in 2010 that were not offering coverage in 2009.
  • Between 2009 and 2010, coverage rates grew from 46% to 59% after the tax credit was made available.
This is no small feat. This is a big deal for small business, and nearly everyone who works for a small business that were previously unable to afford insurance. What should also be pointed out is that as more and more small businesses start providing coverage and their employees start taking advantage of it, the utilization of emergency rooms as first-care facilities will be reduced. As people gain insurance and benefits like no-cost-sharing preventive care visits, those people will no longer be forced to wait till they have no choice but to be taken to the emergency room. An ounce of prevention and all that. That is the real way to reduce health care costs. Yes, costs won't be gone in a day. But if we are truly interested in reducing costs over the long term, we cannot discount the value of prevention.

In terms of coverage, we should not forget the massive expansion of SCHIP that preceded health reform under Barack Obama, covering some 4 million additional children, or the 4.5 million early retirees and 5000 businesses that are being helped by the Early Retiree Reinsurance program under health reform.

Health reform is not a magic bullet. But it starts where we need to start - expanding coverage, focusing on prevention and reducing redundancy, giving regulators the tools to begin to hold rate increases accountable, and in 2014, affordability credits. Howard Dean, when he was campaigning for president back in 2003-04, used to say something really important about health care: if we keep debating about how to reform the entire system, we will never get it done. We need to get everyone in the system first. That's what President Obama's health reform is about - implementing primary safeguards while bringing nearly everyone into the system. Time and history will testify to its success and its detractors' errors.