New study suggests that competition is not having a beneficial impact on insurance rates
The Economic Alliance for Michigan has released a new study concerning the size of the health insurance market and the effect that competition has had on insurance premiums. Typically, more competition in the health insurance markets leads to lower premiums, as insurers fight with one another for the support of consumers. The study, however, suggests that high competition between insurers does not always lead to lower premiums for individuals and businesses.
Prominent insurers are not able to keep insurance rates stable
According to the study, consumers may no longer be able to rely on prominent health insurance providers to keep premiums stable. Action may need to be taken to address the issues concerning health care costs in order to ensure the affordability of insurance coverage. Insurers often cite the rising cost of medical care as the reason for growing premiums, but relatively little has been done to mitigate these costs in the United States. As such, insurers have had to find ways to recover from financial losses.
Average cost of insurance coverage is on the rise
The study shows that in Michigan, the average premium for individual coverage in 2013 was $5,319 and $15,242 for family coverage. For all 50 states, the average premium for individual coverage was $5,571 and $16,029 for family coverage. In states with high premiums, prominent insurers and strong competition has not helped keep rates in check. Notably, insurers that hold a prominent market share in certain states may have limited incentive to keep insurance rates down.
Cost of medical care may need to be addressed in order to keep health insurance premiums down
One of the major issues may be how medical care is provided to consumers. There have been concerns that health care providers have provided treatments that are not necessary or the most cost-effective option. Actions may need to be taken in order to address this issue, but there is no simple solution to this issue. If medical care continues to grow more expensive, health insurance rates are likely to swell.