It turns out that pigs do fly. Last month, insurer Aetna received approval from Connecticut regulators of its request to reduce premiums on individual policies by an average 10 percent, starting in September. Yes, you read that right: reduce the premium. The decrease, which affects some 15,000 consumers, will save those policyholders $259 annually, on average.Say what? No, really. WHAT? Health insurance premiums are going down? Yup, for some people they certainly are. And as Professor Jost said, it is the shape of things to come.
“I think it’s the shape of things to come,” Timothy Jost, a law professor at Washington and Lee University and a consumer representative to the National Association of Insurance Commissioners, says of Aetna’s move.
You see, health reform, for all the screamfests from the Tea Party and the Professional Left, took some pretty darn good steps to contain costs. One of those was the Medical Loss Ratio (MLR) requirement. In the large group market, beginning this year, insurers must spend 85% of premiums in actually delivering care. In small group and individual markets, they must spend at least 80%. Apparently this is the thing that is causing Aetna to lower premiums:
In 2010, Aetna’s individual policies had a medical loss ratio of 54.3 percent, according to the Connecticut Insurance Department’s document approving the rate decrease. Aetna attributes the low MLR to people who signed up for coverage but didn’t use it. “In the case of 2010, we saw lower utilization than we expected across the board,” says [Aetna Spokesman Mohit] Ghose.Translation: we sold too many policies with high premiums that people couldn't even afford to use, thanks to our high deductibles and copays. And now that they have to raise that 54.3% to 80% at least, they are left with little choice but to lower premiums. This provision alone will save millions of policyholders billions of dollars, estimates the Administration.
The Obama administration estimates that starting in 2012 the MLR provisions may result in as many as 9 million people being eligible for rebates totaling $1.4 billion; in the individual market, where people who don’t get insurance through their workplace can purchase coverage, the average rebate could be $164 per person.If Aetna in Connecticut is any indication, the Obama administration's estimate is on the low end of things. And even for those whom premiums aren't dropping, increases, it seems, are happening at a slower pace.
Elsa Obuchowski would like to be one of them. The Norwalk, Conn., resident, who is a freelance textbook editor, pays $520 a month for a UnitedHealthcare policy with a $2,500 deductible. This year, Obuchowski’s increase was 4.5 percent, but in previous years it’s been as high as 14 percent, she says.The Aetna premium decrease, while still an unusual occurring in the American lexicon, it has not been without peer since the passage of health reform. Medicare Advantage premiums actually dropped this year by 1%. Blue Shield of California just announced that they are giving policyholders back $167 million in rebates, after withdrawing their rate increases earlier this year. HHS just announced last week that it is lowering the premiums for at-risk insurance pools (formerly known as the Pre-existing Condition Insurance Plan) by as much as 40%.
As the year progresses and open enrollment period comes up, there will be more data on insurance premiums from the past year as well as the new ones being imposed this year. Those will tell a fuller picture of exactly what we are looking at. But so far, the evidence may be anecdotal, but it's encouraging.
When I wrote last year at length about health reform, the many benefits in it, and direct and indirect cost measures incorporated in it, plenty of Left Puritan reactionaries laughed at us, ridiculed us. Well, it seems now that the shoe is on the other foot, doesn't it. I so hate to say I told you so...