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WellPoint, Obama administration battle over cost of health reform to employers

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On The Beat Industry News In Brief

At this point in the health reform debate, you have to take numbers from any side with a grain of salt. That said, Indianapolis-based WellPoint Inc. has done perhaps the only local analysis of how proposed reforms would affect the cost of health insurance for employers.

Its conclusion? Reform would generally reduce premiums for Indianapolis companies with workers in poor health but raise them for Indianapolis companies with workers in good or average health.

An eight-person firm in Indianapolis with unhealthy workers would enjoy a 23-percent premium cut under health care reform. But WellPoint figures a firm the same size with workers in average health would suffer a 20-percent increase. And an eight-person firm with healthy employees could see its premiums shoot up nearly 94 percent.

The increases do not include any rise in medical costs, which have been going up about 6 percent each year. They do, however, factor in federal subsidies to help uninsured Hoosiers buy health coverage, as well as savings that would come for some because WellPoint could no longer charge more based on health status and gender—and would be restricted in how much it could charge to older customers.

President Obama’s administration immediately criticized WellPoint for failing to give enough credit to the cost-saving measures of health care reform. The administration also countered with its own report, stressing that nearly 77,000 companies in Indiana would be eligible for premium tax credits to reduce their burden.

The White House report also emphasized that small employers would have access to low-cost plans in the health insurance exchange, which could save their employees as much as 28 percent on premiums compared with average family policy premiums today.

And it added that, by insuring more people, health reform would reduce the “hidden tax” that comes from shifting the costs of caring for the uninsured on to those who are insured.

“Health insurance reform will lower premiums for small businesses,” it asserted.

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  • White House's Rosey Prediction
    The White House claims the "exchange" will provide cheaper coverage, but we don't know that because we still don't know what will be mandatory coverage under "Essential Health Benefits." If the package is too rich, it will be costly. Plus with limitations on rating bands, those employers with healthy employees (and therefore cheaper current rates) will see premiums go up. The degree of subsidies is still undefined, as is the risk adjustment mechanism that is supposed to stabilize premiums. Until rules are finalized, there is no basis to predict how much, if at all, the exchanges will save money.

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