Health Insurance Premiums Continue to Rise

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April 28th, 2014

Blog-Post-4.28Despite encouraging figures in the number of enrollees and uninsured, healthcare reform still has one big question to answer – how much will health insurance premiums cost?

The ACA is finally being touted a success with an unexpected 8 million individuals enrolled in the health insurance exchange and recent studies reporting the number of uninsured individuals decreasing to its lowest point in years. Its rocky rollout is almost as good as forgotten. The only thing left to prove is that it will in fact help drive health insurance premiums lower and make provide affordable healthcare coverage across the nation.

Unfortunately, the first few studies are yielding unwanted results. A recent study has indicated health insurance premiums have risen at their sharpest rates in the last 3 years. Earlier this month, a group of Morgan Stanley healthcare analysts sampled 148 insurance brokers who sell coverage in both the individual and small group market.

Health Insurance Premiums Health Insurance Premiums

Across the nation, the study found an average premium increases in excess of 11% for plans in the small group market; and 12% for plans in the individual market. Some states have seen increases almost 10-50 times that amount, specifically for plans offered in the individual market. Below shows the states with highest rises amongst their individual plans:

  • Delaware (100%);
  • New Hampshire (90%);
  • Indiana (54%);
  • California (53%);
  • Connecticut (45%);
  • Michigan (36%);
  • Florida (37%);
  • Georgia (29%);
  • Kentucky (29%);
  • Pennsylvania (28%)

Morgan Stanley’s findings add to the results from a previous study conducted in January. In a survey of a 131 brokers, after the fall rollout of the healthcare law, premiums increased at 6% and 9% in the small group and individual market respectively. This months increases are additional to the hikes seen in the fall, making the impact on consumers even sharper.

While many healthcare reform advocates claim these hikes are inaccurate and temporary, the team at Morgan Stanley credited rising health insurance premiums to 4 factors of the ACA:

  1. Commercial underwriting restrictions.
  2. Age bands no longer allow insurers to vary premiums by age and total cost of coverage.
  3. New excise taxes being levied on insurance plans.
  4. Strict benefit design requirements.

After only the first round of enrollment and a difficult rollout, these findings can’t be assumed as a trend for the future of the ACA just yet. However, if health insurance premiums continue to rise as the market becomes more regulated, many may call for healthcare reform efforts to head back to the drawing board.

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