The Jan. 7 Advocate article, “Obamacare gets under way,” misleadingly referred to a “premium tax.” The only thing in the Affordable Care Act, or Obamacare, that might possibly be described as a “premium tax” is a tax on insurers. In 2018, an excise tax will go into effect on insurers selling policies with very high premiums. This tax is meant to hold down premiums. But Jeff Drozda, head of the Louisiana health insurers’ organization, blamed the “premium tax” for current health insurance premium increases.
Meanwhile, New York Times readers today (Jan. 14) get a different story from Karen Ignagni, head of the national health insurers’ organization. Increasing medical costs are the main reason for increases in premiums, Ignagni says. She also blames the cost of providing an essential level of benefits, which is not yet required by the Affordable Care Act, but will be required next year. She also blames a lack of cost-spreading, since some young and healthy people might not yet have health insurance, despite the incentives the Affordable Care Act will create for them to get coverage.
Ignagni further explains that health insurers are not responsible for premium increases because the Affordable Care Act imposes a review of premium increases, and because the Affordable Care Act imposes a cap on health-care plan administrative costs and profits.
I do not work for the health-insurance industry. But it is clear from the comparison that Ignagni provides a better explanation, and she does a better job of public relations than Drozda. Ignagni’s explanation is both more accurate with respect to the law, and more plausible concerning health insurance economics.
The Affordable Care Act puts pressure on insurers to be more efficient, so it is understandable that insurers will complain. But they can still be accurate when they complain, so the public can understand what really is happening. Instead, Drozda is just saying that Obamacare is bad, because that is what he thinks the Louisiana public wants to hear.
Medical costs have been rising much faster than other costs for a long time. That is the main reason for rising insurance premiums. The Affordable Care Act includes many provisions for controlling medical cost increases. Any librarian would recommend the Kaiser Family Foundation’s website as a reliable source for information about the Affordable Care Act.