Health insurance rates expected to spike throughout the US
For the past year, insurers throughout the U.S. have been warning that health insurance rates would grow at an alarming rate due to the Affordable Care Act. These warnings have come from some of the country’s largest insurers, many of whom had suggested that consumers would be unprepared for higher rates in the future, leading to a phenomenon known as rate shock. In California, however, health insurance rates have yet to show signs that support the warnings coming from insurance companies.
California expects modest rate increases
Late last week, California health care officials announced that it is certain that health insurance rates will change due to the Affordable Care Act. Officials noted, however, that rates are unlikely to grow as much as had been expected in the past. According to state officials, consumers that spend approximately $321 per month on health insurance are expected to see their rates grow by less than $100, which is significantly lower than the rate increases that had been projected by the Congressional Budget Office. For low-income consumers, rate increases are expected to be significantly offset by federal and state subsidies.
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State health insurance exchange may help moderate rate increases
Part of the reason the state is expected to see lower rate increases than expected may be due to the establishment of a health insurance exchange. The exchange exists as a marketplace for affordable health insurance coverage and requires insurers to offer comprehensive policies to consumers at a reasonable rate. Another factor may be the growing power of California’s health insurance regulators, who have been working to keep rate increases below 10% for the past several years.
Other states reporting lower than expected increases
California is the eighth state to announce that health insurance rate increases will be lower than expected, joining Maryland, Oregon, and several others. Some insurance companies in these states are expected to increase rates aggressively, with a few likely to raise rates by 25% or more. Despite this, several states expect that higher rates from larger insurance companies will be offset by the myriad of small companies offering more modest rate increases.