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Are Your Health Insurance Premiums Going to Go Up?

If you are like most Americans, you are probably watching the activities in Washington D.C. with a certain amount of concern.  After all, if Congress does pass a health care reform law that scraps the Affordable Care Act (also known as Obamacare), that could dramatically change a lot of things about your current health insurance.  You will probably want to know if you can enroll in a health plan if you are already sick, or, if you are already enrolled, if your monthly premiums are going to go up.

The short answer is yes, probably.  The National Business Group on Health predicts that health insurance premiums should rise about 5 percent nationally in 2017.  The primary reason insurance premiums are going up is because prices on prescription drugs and most medical services are rising. The general price of insurance is also growing because there are many more newly insured who are much sicker than expected and are costing the insurance industry a great deal to treat.

What to Expect if You Have an Obamacare Plan

If you obtained your health insurance through one of the state or federal health insurance marketplaces sponsored by the Affordable Care Act, then you are likely to see your premiums rise, at least somewhat. There are a number of reasons why this is happening. If you live in certain states, then you may have a shrinking number of insurers participating in your local insurance exchange. According to the Kaiser Family Foundation, only 57 percent of Obamacare enrollees will have three or more insurers in their market in 2017, down from 85 percent last year.   The few remaining insurers are likely to raise premiums because of the lack of competition.

Another major factor in rising premiums for ACA enrollees is the lack of signups by healthy young people. When the Affordable Care Act was designed, there were supposed to be millions of healthy enrollees who would help offset the costs of older, sicker enrollees.  Despite the financial penalty imposed by the Individual Mandate component of the Affordable Care Act, these millions of healthy enrollees never materialized. Without the financial involvement of healthier members, the insurance companies were left saddled with the high costs of treating sicker enrollees. A 2015 report by McKinsey & Co. stated that insurers who participated in the health exchanges lost almost $2.7 billion, largely due to beneficiaries who were sicker than expected. The only way to continue operating was to transfer on these costs to other insurance beneficiaries.

The high number of sick enrollees is driving up insurance costs for the entire health insurance sector.  Under the Affordable Care Act, insurers cannot turn away people with pre-existing conditions, nor can they charge them higher premiums than healthy enrollees. This has led to one of two possible solutions: either quit offering policies to an entire regional market or raise premiums for both healthy and unhealthy beneficiaries.

Could the New GOP Plan Keep Premiums Low?

Last week, the Republican-controlled U.S. House of Representatives passed the American Health Care Act, a modified version that had originally failed to reach a full vote by members a few weeks earlier. The latest edition of the AHCA passed in the House by a very narrow margin, setting the stage for a repeal of the Affordable Care Act. However, there is still a long road ahead before an ACA repeal can be implemented; not only does the U.S. Senate need to pass its version of health care reform bill, but then the House and Senate versions must be melded together before President Trump can sign it into law.

Although circumstances could change, it appears unlikely that the U.S. Senate will use the House’s American Health Care Act as a blueprint for their bill.  The AHCA supposedly would strip millions of Americans of their health insurance, allow insurers to consider pre-existing conditions of applicants, and potentially raise premiums for many remaining insured.  None of this is likely to appeal to Senate Republicans who have a slight majority, but remain concerned about making their home voters unhappy.

There are a number of reasons why a Senate bill will likely be very different from the one passed by the House.  First of all, because Republicans only have 52 of the 100 seats, and it is extremely unlikely that any Democrats will support an ACA repeal, the Republican majority must rely on a Senate procedure to pass the bill with a simple majority instead of the typical 60 votes. This procedural rule requires that the proposed bill be deficit-neutral, or in other words, cannot add to the federal deficit.  While the House’s AHCA does save some money over the Affordable Care Act, it is definitely not deficit-neutral.

It will prove extremely difficult to keep popular components of the existing health care system like the expanded Medicaid system that has insured millions of working class Americans and the Community Rating which prevents insurers from denying enrollment applicants with pre-existing conditions, while still complying with the requirement that the new bill remain deficit-neutral. Many Senators are also in favor of keeping these components of Obamacare, thereby virtually guaranteeing there will be some rigorous bargaining both in the Senate and with their House counterparts.

You Can Still Save Money

Although it is likely that the health insurance industry is likely to raise the price on health plans in many areas of the country, it is still possible to obtain quality coverage at reasonable prices in areas like Hawaii, Salt Lake City or eastern Tennessee.  If you are able to move, you can find markets around the country that continue to have strong insurer competition and therefore enjoy lower health plan premiums.

You may also wish to consider a high deductible plan that typically costs less each month maintain.  Or if you don’t mind having a narrower network, you may choose to enroll in a HMO plan which are often less expensive than broader network plans. If you have any questions or issues, you can always find help at Boost Health Insurance.

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