In a strange twist of fate, more health insurance companies are making requests to reduce their premiums. This comes in stark contrast of the trend that has been dominant in previous months where major health insurers sought to increase rates exponentially. Several small companies have been lowering their rates, but big companies are following suit, some seeking permission from insurance regulators to reduce their premiums by as much as 20%. While this move may seem uncharacteristic for the industry, some experts are saying that it is not as altruistic as it seems.
Aetna, a national health insurance provider, recently won approval from regulators in Connecticut to reduce the rates on their individual policies in the state. The move affects more than 15,000 policyholders, saving each an average of $250 per year. This has won the praise from the state’s consumer advocacy groups, who say that it will help ease the financial burden born by residents in light of a dazed economy.
Timothy Jost, a professor of law at the Washington and Lee University and a representative to the National Association of Insurance Commissioners, says that companies’ seeking lower rates is more likely a sign of the times rather than a change of heart.
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According to the health care reform law of last year, insurance companies are required to spend no less than 80% of the money they collect from premiums on improving the quality of medical care for their policyholders. If companies do not comply with this mandate, they will be compelled to refund the money they collected back to consumers.
Jost believes that many companies are seeking to lower their rates in an effort to make sure consumers are getting what they pay for.