That shouldn’t surprise you. The Commonwealth Fund doesn’t much understand the economics of anything. This is from Ezra Klein:
The Commonwealth Fund released a study today looking at how that regulation has impacted the insurance market. It found that alongside paying out $1.1 billion in rebates, insurers have also cut $350 million in administrative costs. That adds up to a $1.45 billion reduction on insurance premiums in 2011.Although the CWF claimed this was good news for consumers, it ignored this bad news:
Those who work in the individual market are now operating at a loss. This study finds that the average insurer lost $31 for each individual market customer it covered in 2011, after seeing $4 in profits in 2010. That totals up to a $351 million industry-wide loss, meaning that segment operated at a 1.2 percent operational loss.
Now for the really bad news ― below the fold.
In a November 2009 report, the Congressional Budget Office estimated that premiums in the individual market would increase 10% to 13% as a result of the Affordable Care Act. But that was before a lot of details were known. After an informal survey of insurers, Robert Laszewski reports:
On average, expect a 30% to 40% increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms. Those increases can come in the form of outright price increases or bigger deductibles and co-pays…
Small group rates won’t increase by quite as much as for those in the individual market –– a baseline increase of 10% to 20%…
And, the new regulations require that insurance companies have to treat their old and new business the same. Most existing business will not come under the “grandfather” rules. That means most existing individual and small group customers can expect pretty much the same thing. That will be a shock to those who already have insurance and don’t think the new law will impact them.