Health insurance rates increases of extreme levels may be premature

Consumers are cautioned not to take estimates of hikes in premiums seriously, just yet.

As the health insurance marketplaces are just being established and the very first estimates are starting to be released regarding the impact of these exchanges on the cost of the coverage, experts and officials are cautioning consumers not to take the numbers at face value, just yet.

There are many different factors to consider, and they have not yet all been applied to the estimates.

For example, in April, Maryland released the premiums that would be charged by health insurance companies through the exchange – the first state in the country to make this announcement. At first glance, it made it seem that the premiums for the coverage that was not sponsored by employers would be staggeringly high. The proposal showed an average increase in rates by 25 percent.

So far, the health insurance premiums projections are based on the health status of the current insured population.

This status is known as the morbidity. Since the new health insurance laws have said that people with pre-existing conditions must be allowed affordable coverage, the pool of insured individuals in any given state will, as a whole, become less healthy. This will cause the expected costs to rise.

Similarly, a 32 percent nationwide increase in health insurance premiums was estimated by the Society of Actuaries. However, that forecast takes only one cost influencing factor into consideration.

The Covered California analysis that was recently conducted was performed in a much more comprehensive way. The health insurance exchange in that state is among those that will have the greatest impact. California is currently one of the states where the protections are the lowest in the country. The projections that were made in that state, which factored in a larger number of considerations, said that the average rate increase should be expected to be closer to 14 percent.

At the same time, this projection took into consideration that the health insurance would be covering people with preexisting conditions and that insurers would not be able to charge them a higher rate than healthier customers.