The Truth Behind Health Insurance Rates

If you pay attention to your own personal health insurance rates, you may notice that over a period of time they are quite likely to go up. Most individuals are aware of the fact that health insurance premiums tend to increase over time, and these jumps in cost can present quite a financial strain for somebody who is on a tight budget. In order to be able to best anticipate when your rates may go up in the future, it is a good idea to spend some time learning about how health insurance rates are calculated and why they sometimes head skyward.

Do Premiums Ever Go Back Down?

Health insurance premiums are the amount billed to each policyholder that you pay each month, aside from other costs such as deductibles, copays and coinsurance. The better plan you have the more chance there is of paying less and vice versa. Health insurance marketplace almost always requires the same consumer to pay some form of a premium.

Although many notice their health insurance rates going up, few people ever remark on their health insurance rates going down. Premiums very rarely fall, and the reason for this fact is the same reason for most increases in health insurance rates. Like any other field of the modern business world, the health care industry is profoundly affected by inflation. As the cost-of-living rises, the cost of medical care rises with it.

This means that insurance companies are forced to raise their rates to avoid losing money. Inflation is widely considered by economists to be the primary reason why health insurance rates increase.

What is the Affordable Care Act?

The Affordable Care Act (ACA) is a reform law that helps the uninsured gain health insurance coverage and stands against some of the health insurance market by issuing reforms, that could hold the potential for a better health care system. This reform has 5 major goals:

• Help to provide consumers with premium tax credits, to those with household income between and below the federal poverty level.
• If your income is near or above 400% you have the potential to still qualify for premium tax credit.
• If your income is near or below 150% consider changing your coverage during Special Enrollment Period (SEP).
• Supports all methods that are designed to lower the general costs of all health care.
• Supports and contributes to the expansion of Medicaid to cover those below 140% in most states.

According to the CMS, aside from their major goals and purpose, the ACA serves more than $200 million in Health Insurance Rate Grants. This helps with the premium increases in most states.

Is Making Insurance Claims Often Harmful to My Rates?

The other reason why you are most likely to find yourself paying more for health insurance coverage is that you are costing your insurance company money. The more insurance claims you make, the more money the company needs to spend on you. This makes you, to some extent, a financial liability, so if you make claims often your company will almost always raise your rates. Because of this fact, those who need health insurance the most are the ones who often end up straining to make their monthly payments after a sudden increase in their insurance rates.

To protect themselves, insurance companies usually offer higher rates to different people depending on how often those customers are likely to make claims. This is why those with chronic conditions like asthma, vision problems, or diabetes are likely to have higher rates than others without similar afflictions. It is also the reason why people who smoke and are therefore likely to have smoking-related health problems have higher insurance premiums than most non-smokers, who are statistically less likely to make health insurance claims. If you have recently visited a hospital or have had a doctor, write you a new prescription, prepare to see your health insurance rates increase accordingly.

Sources:

1. Review of Insurance Rates, CMS.
2. Affordable Care Act, Health Care.