As Louisiana’s insurance commissioner, I wanted to take a moment to share my concerns about the rising cost of health insurance facing individuals, families, and businesses in our state.
I take very seriously my role to regulate a market for insurance that is affordable, accessible and reliable. Our team at the Louisiana Department of Insurance works hard every day to do just that. The problem is that when it comes to health insurance premiums, we don’t have much authority to do that.
There is no doubt that the Affordable Care Act (ACA), or “Obamacare” as it is called, is having a substantial impact on the cost of health insurance. Let me explain some of the effects we have seen from it on the health insurance market so far.
First, it is important to understand that the ACA requires that all people, no matter how healthy or how sick, be allowed to purchase health insurance and to do so without being surcharged for being sick, or discounted for being healthy. The cost of this type of guaranteed access to insurance is very significant and it is a radical departure from how health insurance has worked in the past.
Another reason for increased premiums is the imposition of the first ever federal tax on insurance premiums under the ACA. This new tax will cost each family approximately $50 per month and the tax will continue to increase in 2015 and beyond.
Another requirement under the law that is driving premiums higher is the “Essential Health Benefits” requirement, which mandates that all health insurance policies cover a wider range of services, regardless of whether a consumer wants those extra coverages. Expanded coverage means expanded costs.
And finally, there are the ever-growing costs of medical care and prescription drugs. Medical inflation continues to rise, as does the cost of prescription drugs, which topped 260 billion dollars last year. We have the greatest medical care and drug research in the world and I am thankful for that — but it costs money, big money.
All of these factors are playing a role in the increased costs of health insurance. The Affordable Care Act, at this point, is misnamed.
As your commissioner of insurance, I am very active on insurance issues across our country. While I don’t have the authority to crack down on health insurance rate increases in Louisiana, I will continue to speak out on this issue and try to control costs for Louisiana consumers in our insurance markets.
James J. “Jim” Donelon
La. commissioner of insurance,