Covered California data paints different picture for health insurance costs
A great deal of confusion has begun to surround the effect the Affordable Care Act will have on health insurance rates in California. Recently, state officials reported that the federal law would lead to a much lower than expected increase in health insurance premiums. These reports were based on information provided by Covered California, the state’s health insurance exchange. The information provided by the exchange does, however, offer a different outlook on the issue that state officials may have overlooked.
Data suggests rates for individual market could grow by as much as 146%
According to the data from Covered California, the Affordable Care Act is expected to lead to a major increase in the health insurance policies in the individual market. The data suggests that premiums in the individual market could rise by as much as 146%. Such a steep increase in health insurance rates would not be prevented by state insurance regulators, as they do not have the adequate authority to bar insurers from introducing higher rates for coverage.
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Young consumers may have no incentive to purchase health insurance coverage
One of the factors that may lead to this steep increase in premiums may be the fact that young, healthy consumers will have little to no incentive to pay for health insurance policies. The federal law requires all U.S. citizens to purchase and maintain such policies, but federal laws also require consumers to maintain auto insurance coverage for the vehicles they use, and many consumers simply do not have auto insurance. Because young consumers may not continue paying for coverage, all that will be left in the individual market will be high-risk consumers with costly medical conditions.
Rate shock may be coming to individual market
Insurers have been warning of the impending rate shock that would come as a result of the Affordable Care Act. This rate shock refers to consumers being unprepared to pay significantly higher premiums for their health insurance coverage as the law becomes fully enacted. While the California health insurance exchange aims to make coverage affordable to consumers, those in the individual market may not be fortunate enough to avoid rate shock.