On January 28, Secretary of Health and Human Services (HHS) Kathleen Sebelius released a new report showing how much families and businesses can save on health insurance premiums and out-of-pocket costs under the Patient Protection and Affordable Care Act (PPACA). "For too long, skyrocketing health care costs have made it hard for businesses to provide coverage for employees and have made it difficult for families to afford coverage," said Ms. Sebelius. "The Affordable Care Act is providing families and businesses with more freedom, choices, and savings in their health care coverage. Without the Affordable Care Act, consumers and businesses would face higher premiums, fewer insurance choices, and rapidly rising health care costs."

Preliminary Results. According to the HHS report, the ACA has produced the following recent effects:
Rate review efforts stepped up. Preliminary results indicate the new tools offered by the ACA appear to be helping to slow down premium growth. In Connecticut, for instance, existing state authority bolstered by federal resources from the Act led the state Insurance Commissioner to reject a proposed 19.9% premium increase by the state's largest insurer that would have raised costs for 48,000 consumers. In Iowa, the Commissioner disapproved a 20% proposed increase and reduced a 60% proposed increase to 16.5%.

Medical loss ratio likely to lead to rebates. This year, health insurers must either meet the new minimum loss ratio requirements by spending at least 80% of premiums on care and quality improvement or offer customers rebates in 2012. Already, 75 million Americans in plans covered by this rule are benefiting from insurers' efforts to lower administrative costs and increase the value of their coverage. HHS estimates, in the small group market, 1 million enrollees could receive rebates averaging $312 per enrollee. In the large group market, another 1 million enrollees could receive average rebates of $166 per enrollee. And roughly 3 million Americans in individual market plans will receive rebates of approximately $164 per enrollee.

Benefits to small businesses. National data is not yet available, but one study estimates that approximately 16.6 million workers are in firms that qualify for the Small Business Health Care Tax Credit. The Congressional Budget Office estimated roughly $6 billion in these tax credits will be provided in 2010 and 2011.

Lower premiums for early retirees. More than 5,000 businesses, unions, states, local governments, and nonprofit organizations in all 50 states are participating in the Early Retiree Reinsurance Program to help keep coverage available to tens of thousands of retired workers ages 55 to 64 and their families. Plans receiving the reinsurance can use it to lower premiums, lower cost sharing, and/or lower their own costs in an effort to sustain coverage for early retirees.

The report also estimates the future savings resulting from the ACA:

• Middle-class families purchasing private insurance in the new state-based health insurance exchanges could save as much as $2,300 per year in 2014.
• Tax credits provided by the ACA will lead to even greater savings. For example, in 2014, a family of four with an income of $33,525 could save as much as $14,900 per year since they will also qualify for tax credits and reduced cost sharing.
• In 2014, small businesses, on average, could save up to $350 per family policy and many may be eligible for tax credits of up to 50% of their premiums.
• The tax credits are already available to small businesses, and cover 35% of their premiums. For example, a firm with ten workers who earn an average of $20,000 annually could currently receive credits of $35,000 annually. These tax credits could save small businesses $6 billion in 2010 and 2011.
• All businesses will likely see lower premiums of $2,000 per family by 2019, which could generate millions of dollars in savings.

According to HHS, these savings are in sharp contrast to the rising insurance costs families and businesses have experienced over the previous decade. From 1999 to 2009 premiums more than doubled, rising by over $7,500 for the average family that receives insurance through an employer. The high cost of health care made it difficult for many small businesses to offer insurance to their workers. The percentage of small employers offering health insurance dropped from 65% to 59% between 1999 and 2009.

For more information, visit http://www.healthcare.gov/center/reports/premiums01282011a.pdf