After years of astronomically rising prices, health care costs are increasing at their slowest rate in decades; recent health spending has been so much lower than projections, it’s saving Medicare and Medicaid hundreds of billions of dollars in projected spending.
Even better, some of those savings are trickling down to patients. In 2010, three out of four of insurers requested that monthly charges to policyholders be raised 10% or more. Last year? Only one-third of insurers requested premium increases that big, saving consumers $1 billion.
Which leads us to some interesting questions: If insurance costs are slowing down overall, then why are any insurers still requesting double-digit rate increases that will cost consumers more? And, hey, wasn’t the Affordable Care Act supposed to rein in how much we pay for our health insurance?
Why Are Health Care Costs on the Decline?
In 2013 so far, the average increase in the cost of health insurance has been low, almost in line with inflation, compared to insurance hikes that were double-digits above inflation previously.
One big factor is the recession, which began slowing down the increase in health costs even before Obamacare passed. Since people have less disposable income, some of them are forgoing medical care.
Additionally, some insurers have shifted away from the “fee for service” method, which pays doctors for every procedure they perform or test they run. Instead, they’re testing out pay structures that give doctors incentive to reduce complications and stop wasteful treatments.
Some Obamacare provisions already in effect require regulators to approve any request to increase a health insurance rate by 10% or more. Karen Pollitz, a senior fellow at the Kaiser Family Foundation, says that provision has contributed to fewer requests so far, as more regulators are emboldened to tell an insurer when a rate increase isn’t reasonable.
In this landscape, then, why do some insurers still insist on huge rate hikes? For some policy holders in California, Aetna rates may go up by as much as 22%, Anthem Blue Cross rates by 26% and Blue Shield of California rates by 20%, reports The New York Times. In states such as Florida and Ohio, rates have gone up by 20% for some policy holders, which can tally up to several hundred dollars a month.
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Where are these outliers coming from, when most other insurers can make do with just small increases?