Healthcare Economist · Health Reform’s Consumer Protections?

by Jason Shafrin

The provision of the ACA (a.k.a. Health Reform) have a number of provisions to mandate more generous health insurance benefits. Some of these provisions include the following:

• Health plans generally must allow adult children up to age 26 to stay on their parents’ policies
• Health Plans cannot charge co-payments for preventive services
• Health plans cannot impose a lifetime limit on benefits.
• Health plans must limit the percentage of revenues they can spend on administrative expenses
• Health plans are prohibited from turning away individuals with pre-existing conditions.

Some sources such as The New York Times claims that these provisions are consumer protections. Michael Cannon of the Cato Institute, however, disagrees. He writes:

“These supposed consumer protections are hurting millions of Americans by increasing the cost of insurance, increasing the cost of hiring and driving insurers out of business… [HHS] estimated that one of the law’s regulations – the requirement to purchase unlimited annual coverage – will increase some people’s premiums by 7 percent or more when fully implemented. A Connecticut insurer estimated that just the provisions taking effect last year would increase some premiums by 20-30 percent… The ban on discriminating against children with pre-existing conditions has caused insurers to stop selling child-only policies in dozens of states.”

Like all things, however, there are tradeoffs to these provisions.
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