Many states have released insurers' proposed premiums for 2015--which, so far, are increasing by an average of 7.5 percent--leading to speculation about whether and when the Affordable Care Act will actually lower premiums as promised.
But there are certain factors at play in the health insurance market that indicate rates not only won't decrease, they will continue to rise, according to Forbes.
Here's a breakdown of three of those variables:
1. Proposed rates are an educated guess
When insurers set their proposed rates for the following year, they're simply making educated guesses based on factors like the estimated ratio of sick and healthy consumers; types of coverage consumers want or have; and increases in healthcare costs. Prior to ACA, insurers had no experience setting rates for plans sold on health insurance exchanges, predicting appropriate premiums was a big challenge. That means it's possible rates will continue rising as insurers gain a stronger handle on the exchange market.
2. Many consumers are avoiding penalties
Because of an increase in exemptions in the ACA, a report found that up to 90 percent of the 30 million uninsured Americans won't face a penalty, FierceHealthPayer previously reported. That means 4 million people, instead of the estimated 6 million, will likely pay a fine in 2016. If the report is accurate, many young, healthy consumers could postpone buying a health plan until they actually need it, which would increase the proportion of unhealthy, sick or older members--and drive premiums higher.
3. Grandfathered plans drive up costs
Some insurers have claimed that the Obama administration's decision last fall to let consumers keep certain plans that weren't ACA compliant impacted their decisions to raise 2015 rates. That's because many consumers chose to remain enrolled in their original plans, so the amount of risk wasn't adequately dispersed among consumers shopping for exchange plans.
To learn more:
- read the Forbes article