New report highlights the falling frequency of health insurance rate increases
As U.S. insurers warn that health insurance rates will spike in 2014, the Department of Health and Human Services has released a new report that suggests that health insurance prices are actually falling, and have been doing so since 2009. The federal agency, which is responsible for the enactment of the Affordable Care Act, has been noting the concerns that consumers around the country have been expressing concerning the costs of coverage. The agency has released the new report in order to address some of these worries and highlight the perceived successes of the Affordable Care Act.
Rate increase proposals drop by 41% since 2009
According to the report, the number of requests coming from health insurance companies for double-digit rate increases has fallen by 41% since 2009. In 2012, one-third of the country’s health insurance companies requested approval for rate increases of more than 10%. Many of these requests have been denied by state regulators on grounds that they would introduce inappropriate financial strain to consumers, or that insurers were unable to justify the reasons for the rate increases.
Federal law helps limit rate increases
The drop in rate increase proposals is due to a provision of the Affordable Care Act, which requires rate increase proposals that call for an increase of 10% or higher to be reviewed by state and federal insurance regulators. In many cases, regulators opt to reject these rate increase proposals. This has lead to some problems for the health insurance industry, which continues to wrestle with the rising costs of medical care.
Insurers may need higher rates to accommodate federal law
According to America’s Health Insurance Plans, an insurance industry trade group, health insurance rates are not set arbitrarily. There are several factors that contribute to rate increases and the group suggests that these factors rarely include the potential for profit. The country’s health insurance companies are required by federal law to spend 80% of the funds they collect through premiums on improving medical care and coverage benefits. Many insurers argue that rate increases are necessary in order to comply with federal law, while also being able to meet the demands of consumers.
