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Health insurance premiums could spike next year

Health Care and Health Insurance
by Chris Merkel
Some worry about paying full price for exchange insurance
Some worry about paying full price for exchange insurance

Over the last decade-plus, health care prices have surged, and with them, so have premiums and other costs for health insurance. The Patient Protection and Affordable Care Act was largely designed to prevent that kind of impact on consumers' wallets, and to some extent has been successful. However, some of the nation's largest health insurance companies now seem to be planning significant rate hikes for 2017.

Rate filing season is here in a number of states, with insurers large and small being required to submit proposed changes for the next calendar year to state regulatory boards, according to a report from the Wall Street Journal. And so far, 2017 appears to be shaping to be somewhat expensive for consumers in many states. Some larger insurers have asked for rate hikes of 20 percent or more in New York, Pennsylvania, and Georgia. Meanwhile, Florida and Maryland have seen filings asking for increases of more than 10 percent.

Health insurance costs could rise significantly for many Americans.Health insurance costs could rise significantly for many Americans.

Why is this happening?
Given the amount most people are already paying for their health insurance, double-digit cost increases can be worrisome for consumers, the report said. One insurer proposed an increase in excess of 65 percent in Georgia, and another asked for one of more than 38 percent in Pennsylvania. However, it is important for people to understand why these changes are being proposed and what that ultimately means for them.

At this point, the requirement that insurers provide coverage to everyone regardless of preexisting conditions has been in place for a few years, and insurers are starting to get a better understanding of what that actually costs them, the report said. They would therefore argue that while these rate hikes seem high, rolling them into the more muted increases seen in the last few years averages out to a cost increase that makes more sense for them.

A potential issue
On the other hand, experts say this could be a problem for insurers, the report said. The reason why is that while these proposed rate changes are averages, it might be only a small percentage of less healthy policyholders seeing a significant cost increase. However, prices will likely also rise for healthier people, and that could present a problem. Insurers are now trying to balance getting more people in good health to sign up for coverage as a means of balancing out the cost of insuring those with preexisting conditions. But sharply rising costs may cause them to look elsewhere to meet their coverage needs.

For these reasons, the more that insurers can do to reach out to those who might be shopping around for coverage next year, the better off both they and their prospective policyholders will be. Given that so many people are now shopping for coverage based on its cost rather than its features, finding a way to strike the right balance between cost and plan features will be of a benefit to all involved.

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