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Outlook Good: You Could See Lower Health Insurance Premiums with Current Health Reform Efforts

By Meredith Ledford on December 26th, 2009
Health Insurance

With health insurance reform prominent on the domestic policy agenda, it may be hard for you to assess what the various proposals to alter the health insurance industry might mean for you and your pocketbook. A Commonwealth Fund report released on December 7, 2009 found that the US House of Representatives bill, which is currently under consideration in the US Senate, not only decreases the federal deficit, but also has the potential to lower health insurance premiums.

Here are a few things you should know about current health insurance reform efforts:

Federal Pocketbook

A big portion of health reform includes expanding affordable medical coverage to more Americans. In addition, reform efforts include modernizing the payment system as well as the delivery of health care services. These improvements are estimated to have a net effect of a federal deficit reduction between $409 billion and $459 billion between 2010 and 2019.

Your Pocketbook

Current estimates have health insurance premiums increasing from $13,649 in 2010 to $22,535 in 2019. This means that your health insurance premium may increase more than 65% if there are no changes to the health insurance industry. However, under current health reform efforts, premiums would see a comparatively moderate increase from $13,649 in 2010 to $20,635 in 2019. This represents an 8.4% savings in projected health insurance premiums.

How?

Many are wondering if health care reform can bend the health insurance cost curve. In other words, how can reform lower national spending on health care and the cost of health insurance coverage to the American public?

Here are a few answers:

  • Administrative Costs: Approximately 13%of insurance premiums are due to administrative costs such as marketing, underwriting, paperwork, benefit complexity, and health insurance broker fees, which you currently pay for through increased health insurance premiums. Both the House and Senate bills propose insurance exchanges that would group individuals and small firms into larger entities and thus drive down those administrative costs

  • Pharmaceutical Costs: The House bill would improve negotiation capabilities with pharmaceutical companies to determine a fair cost for prescription drugs and prescription drug coverage
  • Increase Transparency: In order for you to be a better health care consumer, more information should be provided so you can make educated decisions. Profiling medical care providers on the basis of cost and quality and making this data available to you and health insurance policy plans is a focus of both bills. Currently, you can be a more informed consumer by obtaining competing quotes from qualified agents
  • Emphasize Wellness and Preventive Health Care Services: Both bills would increase coverage of wellness and preventive health care services, which would improve health and decrease costs in the long term

There is still some uncertainty about how health reform might change the health insurance industry. But health care reform has the potential for costs to decrease for you and the country. Be prepared for these changes, and compare quotes from multiple insurance companies to choose the best policy for you and your family.


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