The Collapse of 2008 was caused to some extent by Americans’ fondness for low teaser mortgage rates that, a few years later, rose to unpayable levels. I’m wondering if the same thing has happened with health insurance. Obamacare rates were remarkably reasonable the first time that I checked. They’ve been going up dramatically faster than the official government inflation rate here in Massachusetts. This WSJ article, based on this full table of data, indicates that Massachusetts is not alone:
the Department of Health and Human Services announced that health-insurance premiums on the Affordable Care Act exchanges rose an average of 9% between 2015 and 2016.
The findings [when looking at all exchanges]: Nationally, premiums for individual health plans increased on average between 2015 and 2016 by 14.9%.
I’m wondering if we’ve done the same thing with health insurance that we did with mortgages. We signed up for a deal that we could afford but the numbers were available for only a few initial years.
10% – 15% annual price increases have been pretty common since I started purchasing health insurance for my family as an individual in 2005. Affordability is definitely an issue, but I don’t think it is a new issue.
Lest we forget that the original AHCA Law, the Federal government was going to give the private insurance companies money to make up for their “losses”. Perhaps, the initial lower rates were a intended “feature” of this law.
http://thehill.com/policy/healthcare/263396-spending-bill-includes-rubio-ban-on-obamacare-bailout
There was also a premise that a lot of people that don’t need health insurance would buy it, if it was available. Perhaps that hasn’t happened as expected, which would lower the profitibility. I think the carrot was “do the right thing” and the stick of taxation is only starting this year.
My rate went up about 200% in the first year, so no teaser for me. Then over 20% the next year. Affordable for those not paying.
Well, as the CEO for a not-for-profit with 52 employees in the Washington, D.C. are I can only speak from my direct experience. For the five years prior to the implementation of the ACA we saw average annual premium increases of 20-25%. Since ACA implementation our annual increases have been in the 10-15% range. I can’t of course ascribe a cause and effect relationship of course, but that has been our experience.
I have to say that I don’t think there was a teaser rate effect here. I think that the other features of ACA such as eliminating limitations on pre-existing conditions, allowing children to stay on plans until 26, and eliminating lifetime caps on benefits were unknowns to the insurance companies and probably threw a wrench into the underwriting algorithms.
One other thought…..
In the first several years under ACA we actually received rebates from our provider as they had netted more profit than the law allowed and were required to rebate the net to ratepayers. These were passed on back to our employees. Haven’t seen that in the last 2 years, but our claims experience has changed.
@philg “We signed up for a deal”
No dear sir, “we” didn’t sign up for anything. A bunch of politicians, representing the political will of approximately half the voters in this country, have pushed that on all of us. Said politicians even told us that we had to wait for them to sign the law so we can find out what’s in it.