Supporters of the new health care law are trying to have it both ways. They claim that the regulations that take place this year will provide valuable benefits. Yet they also claim that those benefits will not have an appreciable effect on health insurance premiums.

Of this we can be certain: insofar as the new law expands coverage for preventive and other services, or extends medical care to children with pre-existing conditions and "children" up to age 25, the law must increase premiums. There ain't no such thing as a free lunch.

Premiums will rise faster under ObamaCare than they would have in its absence. We can argue about the magnitude of those increases. But when supporters claim that these regulations will only cost pennies on the dollar, they should admit that what they're really saying is that these regulations don't do much.

The new health reform law will provide much needed relief to the millions of working families and American businesses who have struggled with rising health insurance premiums for far too long. Employer family premiums rose by 119 percent between 1999 and 2008, while the median family income rose by less than 30 percent. As a result, average family premiums for group policies rose from 11 percent in 1999 to 18 percent of median family income today. Absent health reform, premiums were projected to rise to 24 percent of a family's income by 2020. Most Americans cannot afford to devote a fourth of their income to insurance coverage, nor can businesses afford their share of insurance premiums in addition to raises for employees.

With health reform, working families and businesses should see health insurance costs rise much less rapidly in the coming decade. Analysis by the Commonwealth Fund and Harvard economist David Cutler shows that the average family stands to save $1,900 or more in 2020 now that reform has been signed into law. Numerous provisions in the bill can be expected to hold down insurance premiums in the long term, including a minimum medical loss ratio requirement; review of the justification for premium increases by state insurance commissioners and the Secretary of HHS with the sanction that insurers with unreasonable increases will be excluded from participating in health insurance exchanges. The establishment of health insurance exchanges in 2014 will further lower administrative costs and premiums in the individual and small business markets as transparency, choice among plans with comparable actuarial value, and new nonprofit plans enhance competition, and the requirement to obtain coverage broadens the risk pool. The underlying cost growth in health care will also be mitigated as payers move to innovative payment methods that reward quality and value in health care rather than volume. The Innovation Center to be established within the Centers for Medicare and Medicaid Services (CMS) in January 2011 has broad authority to test payment reforms that show promise of slowing the growth in costs, as well as approve state initiatives for all-payer payment reform.

These innovations should slow the growth in health spending per capita below the 5.2 percent projected by CMS for the period 2009-2019. Certainly, double-digit premium increases are not justified when underlying health spending is growing much more slowly.

None of the new consumer protections set to take effect this year will justify anything more than marginal increases in health insurance premiums. Recent analysis by the Commonwealth Fund shows that about two million young adults will soon be eligible for dependent coverage under their parents’ policies, or around one percent of the 160 million working age adults who currently have employer sponsored insurance. Further, young adults are one of the most healthy and least costly groups to insure. Requirements to cover children with pre-existing conditions and remove lifetime limits on benefits can similarly be expected to affect relatively few enrollees and do not justify large increases in premiums.

The Affordable Care Act will usher in a new era in American health care--one in which every American has access to affordable health insurance coverage and no one is turned away simply because they have a pre-existing condition. The new insurance market protections set to take effect in this and subsequent years are designed to work in concert with important payment and system reforms that will improve access and reduce cost growth for everyone. Reform is a historic victory for all Americans, who deserve the finest health system in the world.

One of the immediate concerns with health reform is higher premiums. Premiums reflect average risk, and with the passage of the health care bills, children can be (selectively) added to their parent's policies, and those with pre-existing conditions cannot be excluded from coverage. Each is worth considering in turn.

With respect to the first provision, young adults are generally healthy. In fact, health plans have focused on designing products to attract this group, which generally has much lower rates of insurance. Some states already have raised the age at which young adults can remain on their parent’s policy. While there is potential for adverse selection–for example, based on chronic conditions, depression and reproductive health since married children are eligible– the fact remains that the law does not prohibit underwriting until 2014.

Moreover, people with chronic illnesses appear more willing to pay the extra premium because they value the protection coverage affords (which accounts for why many people with chronic illness do find coverage). The change will also give insurers with low-cost coverage options an opportunity to enhance their marketing of these products as alternatives to young adults.

Regarding the change in coverage exclusions, the number of families without private or Medicaid/CHIP coverage for their sick children remains largely unknown. The fear of adverse selection, however, is unlikely to match the true extent of this population and its ability to significantly impact rates in the individual market. In addition, the national high risk pool will add to the options for families with sick children to obtain coverage.

The provisions related to elimination of cost-sharing for preventive care may represent an important opportunity to reduce premiums. Our research has shown that encouraging members to seek preventive care and adhere to drug therapy (especially in the areas of hypertension and diabetes) is a powerful policy lever for managing chronic conditions that can offset future costs for more serious illness. This new requirement may help inform better benefit designs that use targeted cost-sharing strategies to improve health outcomes for people with chronic illnesses.

Looking to the future, some of the immediate changes may actually help insurers lay the groundwork necessary to absorb 32 million uninsured, not all of whom will be healthy. If indeed having health insurance can help improve health status, then insuring more sick people now through the private sector and high risk pools (which, in theory, help keep rates down in the broader insurance market) may help limit the “shock” to the system in 2014. It may also encourage insurers to revisit their business models and focus on managing health (instead of relying on raising rates) and investing in prevention. Ultimately, there may be a shake-out among insurers that survive health care reform. But our research shows that health plans with larger market share can more effectively negotiate with providers to help keep coverage affordable.

The bottom line is that there is no reason to believe that health insurance markets will experience great turmoil over the next year or so.