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Maligned ‘Obamacare’ Succeeding Big at Pushing Down Insurance Policy Rate Hikes

One of the main goals of the Affordable Care Act is to stabilize the individual insurance market, where high and volatile rates for decades have put basic coverage out of the reach of even middle-class Americans who don’t receive insurance through employers. There’s good news on that front this week in Colorado from the state Division of Insurance, which has announced that individual-market rates have leveled off for first time in years.

Between 2007 and 2012, rate increases on the market grew an average of 8 percent per year. The average rate increase this year, after the implementation of Obamacare, is just 0.71 percent.

Adam Fox at the Colorado Consumer Health Initiative says increased coverage resulting from the health reform law are doing the work of keeping policy rate-hikes in check.

“Having more people covered helps stabilize health care costs,” said Fox. “You’re not seeing healthcare providers and hospitals have to deal with the levels of uncompensated care that they’ve had to historically. That’s a big driver in health care costs.”

In an election year that sees Republican candidates still running hard against the health care law, the remarkable numbers Kaiser is reporting today will buoy Democrats — and not just in swing-state Colorado.

With uninsured rates down to 11 percent from 17 percent in Colorado after the rollout of the new healthcare law, Fox’s organization reports that hospital charity care dropped 36 percent during the first quarter of 2014.

Fox also credited the eight-fold decrease in rate increases to a strong review process at the Division of Insurance.

“Colorado has been more active in reviewing health insurance rates annually to make sure they’re actually justifiable,” said Fox. “It’s a process that is saving millions of dollars a year for Coloradans. ”

This year Colorado Consumer Health Initiative was actively involved in the public comment portion of that review, which the organization argues still needs work in order to make it easier for actual consumers to find their plan, make comments about its coverage, and share anecdotes about their care. As a consumer advocacy organization, CCHI this year advocated for rates to be adjusted based on the cost savings hospitals were reporting due to dips in uncompensated care. The organization is still examining rate data to determine what if any adjustments were tied to those kinds of hospital savings.

More good news, following concern this year about expensive premiums in rural counties like Pitkin and Summit, is that the state’s Western insurance region will be looking at individual plans that cost on average 7.4 percent less than last year.

Combining group and individual policies, the Division of Insurance approved more than 1,000 total health insurance plans from 20 different carriers. Fort Collins saw the biggest overall increase in premium rates at just over 5 percent, while rates in Lamar on the other hand dropped an average of 5 percent.

The statewide average increase in all insurance premiums — across individual and group plans — was just more than 1 percent.

Politics has long plagued the Affordable Care Act and distorted perceptions of its successes and failures. In an election year that sees Republican candidates still running hard against the law, the remarkable numbers Kaiser is reporting today will buoy Democrats — and not just in swing-state Colorado.

In cities across the country, policy rates are falling.

vox obamacare chart

“That is not normal; health-insurance premiums nearly always go up and up and up. They rarely, if ever, decrease,” as Vox reports today. Health care policy writer Sarak Kliff says, it’s not “socialism” that’s doing the trick, but likely market-competition among insurers on the Obamacare exchanges.

“[A]nalysts at the Kaiser Family Foundation have scoured insurers rate filings and find that premiums for Obamacare’s benchmark plan will decrease, on average, by 0.8 percent across 16 large cities. That could be early evidence that a key premise of Obamacare is working: insurers are competing on the marketplaces, and that could be driving health insurance prices down.”

[ Top photo White House flickr stream; chart via Vox. ]

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