Market stability placates insurance rates, protects from wild increases, say analysts

Health Insurance NewsAs insurers begin to feel the weight of the Affordable Care Act, speculation abounds that suggests insurance companies may be raising their rates to offset the effects of the law. Indeed, health insurers throughout the nation have been raising rates, but most claim that higher premiums are being spurred by soaring medical costs and nothing more. Analysts from research firm Avalere Health say that rates should be rising much faster than they are now, yet the insurance industry confounds this estimation.

The reason insurance rates are not soaring out of control may be linked to the 2008 recession. Fewer people make use of their health insurance policies after periods of economic turmoil in an effort to save some money. This slack has allowed insurers to accumulate profits at a rapid pace. Several companies, such as Aetna Inc., have reported growth in the last two years, despite the occurrence of natural disasters that took a heavy toll on lives around the world.

Avalere CEO Dan Medelson believes that this has led to the level of stability seen in most insurance rates. Speaking to the Associated Press, Mendelson said that this stability allows insurers to raise rates by a modest sum and prevents wild fluctuations in the market. While rates may not be going down any time soon, consumers are afforded some amount of leniency as long as the market continues to be stable.

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