The Urban Institute and the Robert Wood Johnson Foundation have released a new report concerning the premiums of insurance policies sold through exchange networks in the U.S. The report notes that policies sold through these exchanges were less expensive than had been anticipated this year. For some time, insurers had suggested that insurance premiums would skyrocket due to the provisions of the Affordable Care Act, but this has not yet been seen.
Premiums are not expected to see any significant increase in 2015
The report anticipates that there will be no significant, double-digit rate hikes for policies sold through state and federal exchanges in 2015. Premiums may increase by a slight margin, but are expected to remain quite stable for the foreseeable future. Beyond exchanges, insurance premiums may continue to increase due to emerging issues in the national market as well as localized trends in some states.
Exchanges create more competition among insurers
The report has also found that the emergence of insurance exchanges has created a significant degree of competition among insurers. Insurance companies are feeling pressure to keep their rates low in order to attract consumers and retain the customers they already have. In some parts of the country, this has not been the case. Rural areas see little competition because there are few insurance companies operating in such locations. These insurers are typically able to charge what they want, within reason, for the coverage they provide through exchanges or through the private market.
With insurance premiums likely to remain stable throughout 2015, more consumers may opt to purchase coverage through state and federal exchanges in the future. The Congressional Budget Office predicts that some 15 million people throughout the country will enroll in exchanges next year, up from the 8 million that enrolled for coverage in 2014. Exchanges have been the subject of controversy recently, but past problems may not actually have a negative impact on the future of these digital marketplaces.
