SHOTLIST:

A TELEVISION - AP CLIENTS ONLY

Washington - March 26, 2013

1. SOUNDBITE (English) Ricardo Alonso-Zaldivar, Associated Press Reporter: "This study looked at what's going to happen to the market for individual health insurance. People who don't get coverage for the job. And that is the main part of the market that President Obama's health care law is going to affect.

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3. SOUNDBITE (English) Ricardo Alonso-Zaldivar, Associated Press Reporter: "It looked at the underlying cost of medical claims, which is the biggest factor driving premiums. And what it found is that there would be a big increase, 32 percent, on average around the country."

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5. SOUNDBITE (English) Ricardo Alonso-Zaldivar, Associated Press Reporter: "That there is a huge disparity in the impact from state to state. And the authors of the study said that that basically has to do with differences in population among the states. Some states have younger residents. Some states have older residents. And is also has to do with the differences in existing health insurance laws around the country in different states. And what's happening is that the federal law is kind of bringing everybody up to the same level. So in states that are already restricting what insurers can charge sicker people, there might be a decline in costs. But in states that don't do that, you might see a big increase."

STORYLINE:

Medical claims costs _ the biggest driver of health insurance premiums _ will jump an average 32 percent for Americans' individual policies under President Barack Obama's overhaul, according to a study by the nation's leading group of financial risk analysts.

The report could turn into a big headache for the Obama administration at a time when many parts of the country remain skeptical about the Affordable Care Act. The estimates were recently released by the Society of Actuaries to its members.

While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.

The disparities are striking. By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said.

The report did not make similar estimates for employer plans, the mainstay for workers and their families. That's because the primary impact of Obama's law is on people who don't have coverage through their jobs.

The administration questions the design of the study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. The study also doesn't take into account the potential price-cutting effect of competition in new state insurance markets that will go live on Oct. 1, administration officials said.

On the plus side, the report found the law will cover more than 32 million currently uninsured Americans when fully phased in. And some states _ including New York and Massachusetts _ will see double-digit declines in costs for claims in the individual market.

Uncertainty over costs has been a major issue since the law passed three years ago, and remains so just months before a big push to cover the uninsured gets rolling Oct. 1. Middle-class households will be able to purchase subsidized private insurance in new marketplaces, while low-income people will be steered to Medicaid and other safety net programs. States are free to accept or reject a Medicaid expansion also offered under the law.

Obama has promised that the new law will bring costs down. That seems a stretch now. While the nation has been enjoying a lull in health care inflation the past few years, even some former administration advisers say a new round of cost-curbing legislation will be needed.

Millions of now-uninsured people will be covered as the market for directly purchased insurance more than doubles with the help of government subsidies. The study found that market will grow to more than 25 million people. But costs will rise because spending on sicker people and other high-cost groups will overwhelm an influx of younger, healthier people into the program.

Some of the higher-cost cases will come from existing state high-risk insurance pools. Those people will now be able to get coverage in the individual insurance market, since insurance companies will no longer be able to turn them down. Other people will end up buying their own plans because their employers cancel coverage. While some of these individuals might save money for themselves, they will end up raising costs for others.

Part the reason for the wide disparities in the study is that states have different populations and insurance rules. In the relatively small number of states where insurers were already restricted from charging higher rates to older, sicker people, the cost impact is less.

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