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Government says health insurance reform saved consumers $1.2 billion

By Maryalene LaPonsie on October 10th, 2013

It's been law for more than three years, but the Patient Protection and Affordable Care Act remains controversial, particularly among those who believe health reform will limit health insurance choices and increase costs. However, the government says that isn't the intent of the law and it did, in fact, save consumers $1.2 billion in 2012.

"Thanks to the health care law, we are seeing that holding insurance companies accountable is leading to increased competition and saving billions of dollars for consumers across the country," said Kathleen Sebelius, Secretary of Health and Human Services, in a written statement.

Savings from lower health insurance rates

According to the government, the savings are a result of a rate review provision of the health reform law.

Beginning in September 2011, health insurance companies were required to meet new federal rate review requirements. Under this provision of the health reform law, insurers had to submit a justification for any increase in medical insurance premiums that would exceed 10 percent.

HHS asserts the provision is responsible for keeping rates in check and estimates it saved $1.2 billion last year in the form of lower premiums for individual and small group health insurance plans.

Health insurance exchanges hoped to continue savings

The government is hoping soon-to-be launched health insurance exchanges will build upon the savings from the rate review guidelines.

"This type of competition and transparency will continue in the Health Insurance Marketplace, or Exchanges, where Americans will be able to shop for and compare plans side-by-side to find the one that fits their needs and budget," wrote Sebelius.

The exchanges will be open for enrollment on Oct. 1 and are intended to provide affordable health insurance options to individuals, families and small businesses. By Jan. 1, 2014, virtually all U.S. residents will be required to have health insurance coverage whether that be provided by an employer or a government program or purchased on an exchange.

The benefit for those buying on the exchanges is the promise of low cost health insurance. For those earning between 100-400 percent of the federal poverty limit, government tax credits will be available to subsidize the cost of premiums. Those earning less than 100 percent of the poverty limit should be eligible for free health insurance through Medicaid.

Individuals who fail to obtain health insurance coverage through any source next year will be subject to tax penalties.

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