Obama's Top Health Care Adviser Acknowledges Harsh Reality

Kathleen Sebelius: Obamacare Implementation May Cause Some Health Care Costs To Rise

* Sebelius says expects some shifting in the insurance markets

* Independent study sees 32 percent average rise in premium costs

* Key changes from Obama's signature healthcare law coming next year

WASHINGTON, March 26 (Reuters) - President Barack Obama's top healthcare adviser acknowledged on Tuesday that costs could rise in the individual health insurance market, particularly for men and younger people, because of the landmark 2010 healthcare restructuring due to take effect next year.

U.S. Health and Human Services Secretary Kathleen Sebelius said definitive data on costs will not be available until later this year when private health plans become authorized to sell federally subsidized coverage on new state-based online marketplaces, known as exchanges.

"Everything is speculation. I think there's likely to be some shifting in the markets," she told reporters at the White House.

The law, also known as "Obamacare," eliminates discriminatory market practices that have imposed higher rates on women and people with medical conditions.

It also limits how much insurers can charge older people. But while the changes are expected to lower costs for women, older beneficiaries and the sick, men and younger, healthier people will likely see higher rates as insurers try to hedge against continued risks.

"Women are going to see some lower costs, some men are going to see some higher costs. It's sort of a one to one shift ... some of the older customers may see a slight decline, and some of the younger ones are going to see a slight increase."

Insurance premiums could rise for some with individual plans, she said, as Obama's Patient Protection and Affordable Care Act enhances the level of coverage and either eliminates or reduces the rate of price discrimination against people who are older, female or have preexisting medical conditions.

"These folks will be moving into a really fully insured product for the first time, so there may be a higher cost associated with getting into that market," Sebelius said.
But those who qualify for federal subsidies through state healthcare exchanges would still get a better deal, she said.

Her remarks coincide with growing uneasiness about possible cost increases among lawmakers and executives in the $2.8 trillion U.S. healthcare industry.

A new study released on Tuesday by the nonpartisan Society of Actuaries estimates that individual premiums will rise 32 percent on average nationwide within three years, partly as a result of higher risk pools. Changes would vary by state, from an 80 percent hike in Wisconsin to a 14 percent reduction in New York.

Obama's healthcare restructuring, the signature domestic policy achievement of his first term, is expected to provide coverage to more than 30 million people beginning on Jan. 1, 2014, both through the state exchanges and a planned expansion of the government-run Medicaid program for the poor.

Subsidies in the form of premium tax credits, available on a sliding scale according to income, are expected to mitigate higher costs for many new beneficiaries.

But the insurance industry, which is set to gain millions of new customers under the law, is warning of soaring premium costs next year because of new regulations that include the need to offer a broader scale of health benefits than some insurers do now.

That has raised concerns about people with individual policies not subject to subsidies and the potential for cost spillovers into the market for employer-sponsored plans, which according to U.S. Census data, cover about half of U.S. workers.

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