Can you explain why my health insurance rates are seemingly going up for no reason?
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Asked May 5, 2014
The cost of health insurance is a fluid amount. Your rates can increase or go down with each renewal, and are subject to change dramatically if you add a person to the plan or someone contracts a long-term injury or illness. Recently, a lot of people have seen their rates go up for no apparent reason, however, and that can be attributed to changes in how health insurance works in the United States.
Until this year, insurance companies did not have to provide coverage to conform to any particular standards of care. Some people bought minimal coverage while other paid for health insurance and other coverage's that increased the cost. With the roll out of the ACA, new standards for health insurance are being introduced, and many insurers are scrambling to make up for the additional costs.
A lot of people are seeing their rates go up, or receiving notices that their current health plan is being phased out. This is because the plans currently offered do not conform to the minimum acceptable insurance plans. As the pans are brought up to the new minimum levels, the costs of providing them are increasing as well, and the costs are being passed on to policyholders.
Finally, the ACA also mandates that coverage must be available for people with preexisting health conditions. This is causing the base rates for all health insurance policies to change somewhat, as there is a greater amount of coverage available and insurance providers anticipate a surge in the associated costs. Over the course of the next year, insurance rates will fluctuate somewhat, but they will stabilize again once the new mandates are fully in effect.
It is also possible that the rates will decrease for many people. Part of the ACA mandate includes language that prohibits insurance companies from spending more than 15% of the premiums they take in on non-health related uses. Where an insurance company was able to invest as heavily as they wished in advertising a year ago, they are now required by law to spend a vast majority of the premiums on healthcare expenses, and surplus amounts must be rebated to policyholders.
Answered May 5, 2014 by Anonymous