Actuaries Express Concern that Health Care Costs Will Remain High Regardless of Supreme Court Decision on Affordable Care Act

Jun 20, 2012, 08:00 ET from Society of Actuaries

Survey shows 66 percent of actuaries expect annual health care costs for large group employers and individuals to go up at least 5 and 10 percent, respectively

SCHAUMBURG, Ill., June 20, 2012 /PRNewswire-USNewswire/ -- As the country awaits the highly anticipated ruling by the U.S. Supreme Court this month to uphold or overturn the Patient Protection and Affordable Care Act (ACA), a new Society of Actuaries (SOA) member survey reveals concerns about increasing health insurance costs regardless of how the court rules.

The survey of 160 actuaries, conducted June 13 at the SOA's annual Health Meeting, found approximately two-thirds of respondents expect annual costs for currently insurable individuals to increase at least 10 percent, and costs for large group employers to increase at least five percent, even if the ACA is upheld in its entirety.

If the individual mandate is struck down, but all other provisions remain, 76 percent of actuaries surveyed expect annual health costs for currently insurable patients to increase more than 10 percent. Only three percent of respondents expect costs to go down if the individual mandate is thrown out and all other provisions remain.

Susan Pantely, FSA, MAAA, principal and consulting actuary with Milliman, Inc., and member of the SOA, noted, "You have to get every risk in the pool – the healthy risks and the less healthy risks – to keep insurance affordable. Without the individual mandate that will be very difficult to do."

However, Pantely thinks that the current individual mandate is weak, since many people will choose to pay the penalty until they need insurance. (View Pantely's comments here:

Despite decision, coverage gap will remain

The survey found that eight in 10 actuaries (83 percent) expect the ACA to reduce the number of uninsured by at least 10 million (from approximately 50 million currently uninsured). More than one-third (37 percent) of respondents believe the ACA will reduce the number of uninsured by up to 30 million, potentially leaving 20 million still uninsured. 

"I agree with my colleagues that the ACA will increase coverage, but none of us believe that it will cover the whole 50 million and that's where there is a gap," Pantely said. "A large portion of this expansion is through Medicaid, and right now many uninsured people are already eligible for Medicaid but just haven't enrolled. There have been many attempts to get these individuals signed up for the program."

There are ways to minimize the number of uninsured without the ACA, Pantely said. For example, she noted that people can already shop for insurance rates through brokers and websites, even though these methods may not be as sophisticated as federal and state-run health insurance exchanges.

Exchanges likely not to reduce insurance costs

Sixty percent of survey respondents believe exchanges will not reduce individual and small group insurance costs compared to pre-exchange private-market options.

Ian Duncan, FSA, FIA, FCIA, MAAA, professor of Actuarial Statistics at University of California, Santa Barbara and SOA member, said that even if the Supreme Court upholds the law, significant changes are likely to occur. "It's becoming clear this is going to cost way more than expected and implementation will be more difficult and time consuming in terms of the rollout timing," Duncan said. "It's virtually impossible to do all states by 2014."

(View Ducan and Pantely's conversation here:

"One of the flaws of the ACA was to fit everything at the same time," Duncan said. "Health care reform has always proceeded as a series of small steps. If [the ACA is] repealed, experiments like Accountable Care Organizations (ACOs), bundled payments, consumer driven health and improved analytics, will continue. But, it will be up to the states to decide which aspects are worth continuing. 

To see the full survey questions and responses, visit:  

About the Survey
The Society of Actuaries conducted a survey of 160 of its health actuaries on June 13 during the SOA's Health Meeting in New Orleans. With their deep analytical training and unparalleled approach to modeling the broadest spectrum of risks, actuaries are uniquely positioned to uncover the most relevant data and develop solutions for some of the most challenging and complex health care issues. Drawing on their holistic viewpoint, actuaries synthesize complex data into meaningful information that allows businesses, medical providers, insurers and consumers to make smarter and more strategic decisions around benefit design and selection, provider reimbursement, employer contributions and member premiums.

About the Society of Actuaries
The Society of Actuaries is an educational, research and professional organization dedicated to serving the public, its members and its candidates. The SOA's mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal problems. The SOA's vision is for actuaries to be the leading professionals in the measurement and management of risk. For information, visit

Ellyn Michalak, Burson-Marsteller

Kim McKeown, Society of Actuaries

SOURCE Society of Actuaries