Straight talk on health care reform: Reforms not a key driver on cost of premiums

Fact: National health care reform is well under way and already helping people.

Fact: Most people don't know a lot about the reforms, and the information that came out of last year's debate (and the recent campaign season) was not always accurate or informative.

The Bell Policy Center wants to do something about that last fact. We plan to release regular communications to explain this far-reaching law – the Patient Protection and Affordable Care Act – and to counter misinformation and myth and provide updates on provisions of the new law. Whenever possible, we will explain the law's impact on Coloradans.

Recently, increases in health insurance premiums have been drawing attention, and many Coloradans think these reforms have greatly contributed to the costs of health insurance premiums. The Colorado Division of Insurance reports phone calls and emails from angry consumers who believe that insurance companies are hiking up premiums because of federal reforms.

Not true.

State Insurance Commissioner Marcy Morrison, in a press release from the Colorado Department of Regulatory Agencies on Nov. 4, said: "It's a hot issue for many people, and we figured the best way to address the rumors was to publish the facts, so people could see for themselves what is driving the price of health insurance. What we found isn't surprising: health insurance premiums continue to rise. But what may be eye-opening for some people is that federal health reforms have contributed from zero to a maximum of 5 percent of those increases. It's not the primary cause for increasing rates."

If your coverage is through a small business, then the maximum increase would be between zero and 4%; if you are covered through a large employer, it is zero to 1.4%. (Read the press release, more detail from Bell policy analyst Bob Semro and a Denver Post story.)

National reforms will not be fully implemented until the end of 2014, but many provisions of the law have potential to reduce premium costs as we move forward. A July 2010 report from the Robert Wood Johnson Foundation concludes: "Reforms designed to promote competition and contain costs will tend to lower premiums over time, relative to the no-reform case."