Health Costs Up At Slowest Rate in 50 Years

6:56 PM, Jul 29, 2013   |    comments
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Kelly Kennedy, USA TODAY

WASHINGTON - Personal health care costs rose last year at the slowest rate in the last 50 years, the White House announced Monday, citing statistics aimed at bolstering the case for the 2010 health care law.

The 1.1% increase in personal consumption spending over the 12 months ending in May was due to decreases in hospital and nursing home services, according to a statement from Alan Krueger, chairman of the White House Council of Economic Advisers. Hospital readmissions rates dropped from an average of 19% to 17.9% for Medicare patients since the passage of the 2010 health care law, Krueger said.

The law is not affecting job growth, Krueger said. Job growth in industries that have traditionally not provided health insurance for their employees, such as restaurants, was higher. Restaurant sales and employment have increased more than any other retail sales industry since the law was signed, at about 11% for employment and 17% in retail sales, and weekly hours also have grown about 3% since the law was signed.

The announcement came after President Obama told The New York Times this weekend that support would come as the 2010 health care law is implemented, a hope that Americans will like the law's benefits when they take effect.

Monday's announcement follows a recent study the Department of Health and Human Services that showed that for Americans who receive health insurance through their employers, premiums rose 3% from 2011 to 2012, the lowest increase since 1996.

Obama has focused recently on the parts of the law have taken effect, such as the ban on out-of-pocket costs for preventive health exams, rebate checks from insurance companies that spent less than 80% of premiums on health care and drug discounts for beneficiaries of the Medicare Part D program. Also, children up to age 26 can remain on their parents' health insurance plans.

Congressional Republicans remained unswayed by the White House claims. They are voting in the House this week to repeal parts of the law. It is their 40th attempt to repeal, change or defund the law. The bill is not likely to make it to the Senate.

As the administration works to gain 7 million new people to purchase private insurance through the federal and state health marketplaces, or exchanges, beginning in October, they have stressed that their message has been streamlined to those who need insurance. To that end, they are appealing to young, mostly Hispanic Americans in Florida, California and Texas.

In other words, middle-class Americans living in Idaho and covered by employer-sponsored insurance probably won't see advertisements for the new insurance programs.

Meanwhile, states that have released the rates insurers provided for the policies to be sold on state-sponsored health exchanges have turned out to be lower than expected.

Friday, Maryland announced insurance premiums up to 33% lower than expected. Connecticut's plan includes an insurer that announced it would drop premium costs an average of 36% below its original proposal. And young people in Nevada will be able to buy catastrophic coverage for less than $100 a month. California and New York also have lower-than-expected rates.

A Department of Health and Human Services report showed that silver health exchange plans, or the lower cost plans that uninsured people are most likely to buy, are already an average of 18% lower than expected in the 11 states the government looked at.

Not all states are reporting lower rates. Republican Indiana Gov. Mike Pence, who opposed the health care law while a U.S. representative, released preliminary statistics showing rates would be 72% higher than current plans. But those numbers lumped all four categories of coverage together. and did not include the rates for silver and bronze plans. The Society of Actuaries estimated that underlying claims costs could go up by an average of 32% by 2017.

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