Highmark CEO: Health-care law to raise costs most for small businesses, self-insured
By Alex Nixon
Published: Thursday, December 6, 2012, 12:52 p.m.
Updated: Thursday, December 6, 2012
Health insurance costs for small businesses and those who buy their own plans could rise dramatically in 2014 when the government fully implements the health care law, Highmark Inc.'s CEO said on Thursday.
William Winkenwerder, who has led the state's largest health insurer since June, said the biggest cost increases likely will affect young healthy people who buy their own insurance.
Premiums for that group could double or triple because of changes under the federal Affordable Care Act, Winkenwerder said during an hourlong news conference at Highmark's Downtown headquarters. The nonprofit Blue Cross Blue Shield company counts 4.9 million members in Pennsylvania, Delaware and West Virginia.
Insurers across the country will raise prices on young, individual insurance buyers and some small businesses because of rules under President Obama's health care reform, such as requirements that the highest premium not be more than three times the cheapest premium and that men not pay less than women, Winkenwerder said. He said women of child-bearing age are more expensive to insure.
Insurers don't have a choice about whether to raise prices, he said. “By my reading of this, we're compelled to do this.”
Winkenwerder said cost increases are “going to be significant” for businesses.
America's Health Insurance Plans, a Washington industry group for the nation's health insurers, released a study on Thursday that said Pennsylvanians will pay about $9 billion more for insurance over 10 years from a tax on premiums that starts in 2014.
“This tax will add a financial burden on Pennsylvania families and small businesses at a time when they can least afford it,” said Karen Ignagni, the group's CEO.
An estimated 30 million uninsured Americans will gain access to health coverage under the law, according to the White House.
The law requires that virtually all Americans have health insurance starting in 2014, whether they get it through an employer or buy it themselves. Known as the individual mandate, the provision will be enforced by the Internal Revenue Service, which will require anyone filing a tax return to prove he or she has coverage.
By 2016, the uninsured will pay a penalty of $695 or 2.5 percent of household income, whichever is greater, according to the Congressional Budget Office, which estimated in September that about 6 million Americans would choose to pay the penalty two years after the mandate takes effect.
Cost increases under the law could be so large for some people that it would be cheaper for them to drop coverage and pay the penalty, Winkenwerder said.
In addition to the increases likely to hit some small businesses and healthy individuals, taxes in the law on medical device and pharmaceutical sales will result in higher premiums, Winkenwerder said.
To combat those costs, he said Highmark is developing insurance products that would allow access only to lower-cost medical providers and give patients more information about costs.
For example, Highmark's Community Blue product, available starting next month, can be up to 25 percent less expensive but doesn't include access to UPMC, the largest health system in Western Pennsylvania.
Winkenwerder declined to talk about Highmark's pending deal to acquire financially-troubled West Penn Allegheny Health System, Pittsburgh's second-largest hospital operator. The two organizations are trying to finalize a deal, which hinges on reducing West Penn Allegheny's $1 billion in debt and pension liabilities, possibly through bankruptcy.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.
- Automated teller machine fees up 20 percent in 5 years
- Americans fail to find jobs as firms hire foreigners
- PPG Corning bankruptcy plan receives preliminary approval
- Pa. jobless rate declines as fewer look for work
- As yen falls, so does cost of products from Japan
- Web giants likely to battle for music fans’ attention
- Federal regulators say Consol can reopen fire-stricken mine
- Idaho spud giant bets on biotech potatoes
- Sensors can develop faulty connections
- Government OKs Texas LNG plan
- Auto safety advances through the decades
You must be signed in to add comments
To comment, click the Sign in or sign up at the very top of this page.
Subscribe today! Click here for our subscription offers.