Montana residents can expect to see their health insurance premiums rise in 2016. Insurance Commissioner Monica Lindeen has announced that rates will increase between 22% and 34% in 2016, affecting as many as 41,000 people living in the state. The rate increases will not affect those that receive employer-sponsored health insurance coverage or those that receive coverage through HealthCare.gov and receive federal subsidies for these policies. Those in the private market, however, may experiencing a growing degree of financial pressure.
Consumers using their coverage for the first time leading to greater losses for insurers
Small business and small group plans are expected to see a more modest rate increase, coming in at 5.6% and 6.8% respectively. According to Commissioner Lindeen, the rate increases are due to numerous factors. One of the reasons has to do with Montana residents using their coverage more frequently and, in many cases, for the first time. In 2014, many state residents were able to obtain health insurance coverage that they never had before, providing them with a way to access medical care services.
Consumers may be driven to the state’s insurance exchange
Growing health insurance rates in the private market may drive consumers to seek coverage through the state’s exchange, which is managed by the federal government. Through the exchange, consumers can find relatively inexpensive coverage. The cost of this coverage can be offset by federal subsidies, which have helped make insurance coverage more attractive to consumers that could not afford it without these subsidies.
Insurers may have priced their coverage too low in 2015
One issue that Commissioner Lindeen has highlighted is that insurers may have priced their policies too low in 2015 in an effort to attract new customers. Low prices have helped make insurance coverage more accessible to consumers, but this has also lead to financial losses that insurers must recover from. Raising premiums is one of the ways that insurers can recover from these losses, but this also translates into greater financial strain for consumers.
