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GAO-14-263R 1 (2014-01-31)

handle is hein.gao/gaobaahow0001 and id is 1 raw text is: GAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 January 31, 2014 The Honorable Orrin G. Hatch Ranking Member Committee on Finance United States Senate Private Health Insurance: The Range of Base Premiums for Individuals Age 19 and 64 in the Individual Market by State in January 2013 Dear Senator Hatch: Millions of Americans obtain health coverage by purchasing private health insurance,1 including over 11 million individuals who purchased individual market plans in 2011.2 These Americans may be purchasing individual health insurance for a variety of reasons, including being self- employed or a small business owner, or because their own employer does not offer insurance. In 2013, in most states, under applicable law, individual health insurance market premium rates could have varied on the basis of age, gender, health status, and other factors. In addition, states could have varied in their specific requirements for what insurers could consider in underwriting-the process of assessing the health status of the insurance applicant and setting the premium according to the health risk of that individual.3 Historically, with certain exceptions, when individuals purchasing coverage in the individual market went through the underwriting process, their coverage could have been denied, offered at a higher-than-average premium, or offered with a rider that excluded coverage of a preexisting condition.4 The Patient Protection and Affordable Care Act (PPACA) included a number of provisions that changed private health insurance requirements, and these changes could affect the cost of individual market health insurance premiums. For example, under PPACA, insurers may not deny coverage to individuals based on preexisting conditions or use gender or health status to set premium rates, and they are restricted in the amount they can vary premiums based on age and tobacco use.5 PPACA also included an individual mandate that requires most individuals to have health insurance coverage or pay a tax penalty.6 These PPACA provisions were not 1Private health insurance includes individual and group market plans. Participants in the individual market purchase health insurance coverage directly from an insurance carrier. Group market participants generally obtain health insurance coverage through a group health plan, usually offered by an employer. 2Centers for Medicare & Medicaid Services, The 80/20 Rule: How Insurers Spend Your Health Insurance Premiums (Baltimore, Md.: February 15, 2013). 3Bernadette Fernandez, Congressional Research Service, Drivers of Premium Increases and Review of Health Insurance Rates (Washington, D.C.: January 20, 2012). 4 A preexisting condition is a health condition that exists before someone applies for or enrolls in new health insurance coverage. 5See the Patient Protection and Affordable Care Act (PPACA), Pub. L. No. 111-148, § 1201,124 Stat. 119, 154 (2010) (codified at 42 U.S.C. § 300gg(a)(1)(A)). 6Pub. L. No. 111-148, §§ 1501, 10106, 124 Stat. 242, 907, as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, §§ 1002, 1004, 124 Stat. 1029, 1032, 1034 (codified as amended at 26 U.S.C. § 5000A). GAO-14-263R Range of Health Insurance Premiums in 2013 Page 1

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