Lawmakers flip on health insurance policy due to intense lobbying

Health insurance rates
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Health insurance rates increaseLawmakers announce health insurance rate increase

Federal lawmakers have announced that prices associated with the Medicaid Advantage program will rise as part of the country’s efforts to reform the health care sector. This is nearly the polar opposite of the federal government’s initial plans, which involved lowering the price of coverage associated with the Medicaid Advantage program, thereby making health insurance more affordable for those using the program. The decision comes in the wake of aggressive lobbying from the health insurance industry.

Medicaid Advantage coverage to become more expensive

The Centers for Medicare & Medicaid Services has announced this week that rates for the Medicaid Advantage program will rise by 3.3% in 2014. This is a reversal of the 2.3% reduction that was announced in February this year. The health insurance industry has been advocating higher rates in order to retain some financial stability, claiming that the country’s Affordable Care Act will serve to create significant challenges for insurers in the coming years.

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Seniors to pay more for their coverage

Approximately 14 million people receive coverage through the Medicaid Advantage program. These consumers are considered senior citizens, many of whom have chronic and potentially serious health conditions. The more serious these conditions are, the more expensive they can be in a health insurance perspective. Insurers argue that higher rates are necessary on policies that cover those with serious illnesses due to the costs associated with medical care for these people.

Higher rates considered necessary by insurers

The policy shift has caused some controversy, especially among those that receive coverage through Medicaid Advantage. Some argue that health care reform is meant to reduce the costs associated with health insurance, making coverage more accessible to those that need it. The problem, however, is that while the Affordable Care Act requires all citizens to hold insurance coverage, healthy individuals have little incentive to do so as they will likely not use their coverage regularly, meaning that they are paying for protection that has little value. Because of this, healthy people are not likely to purchase coverage, thereby removing a significant portion of premiums from the health insurance market; premiums that must be accounted for in other sectors.

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