Health insurance rates suspected to rise due to federal law
Over the past few months, health insurance companies throughout the U.S. have been warning of the impending rate shock that could be spurred by the Affordable Care Act. Rate shock implies rapidly rising health insurance premiums that consumers throughout the country may not be prepared to deal with. While insurers have been warning that rates may spike in the coming year due to the federal health care law, federal legislators have suggested that this will not be the case. A new study from the Society of Actuaries, an education and research institution, suggests that the concerns of health insurance companies may be justified.
Study claims insurers will be paying more on medical claims in the coming year
According to the study, health insurance companies are expected to pay out an average of 32% more on payouts for medical claims for individual consumers. This is due to provisions of the Affordable Care Act, which are expected to translate into significant financial losses for some health insurance companies. In an attempt to recoup any potential losses they could see, health insurance companies are expected to increase premiums on individual policies. Other provisions of the Affordable Care Act may also encourage companies to raise rates for coverage.
Federal officials claim health care law has provisions to prevent rate shock
Federal officials are questioning the accuracy of the study. Officials suggest that the study does not account for the “big picture,” and that many provisions of the Affordable Care Act exist to mitigate the rise of health insurance premiums. One such provision requires that states have a comprehensive rate review process in place that allows state regulators to reject any rate increase proposal they deem excessive. If a state’s rate review process is found lacking, federal regulators will be responsible for capping rate increases where appropriate.
Time will tell what impact the Affordable Care Act will have
There are many fears that surround the Affordable Care Act, but the federal law has not yet been fully enacted. Whether these fears will become reality has yet to be seen. Health insurance companies argue that rate shock is an inevitability due to the federal law, while federal officials claim there are many parts of the law itself that will prevent rate shock. Only time will tell which side of the argument is right.