Why are my rates going up?
Why are my rates going up? The recent 2014 health insurance rates ranging in 15-20% increase is having a profound impact especially on small businesses. Benefits are furthermore deteriorating with new deductibles adding a 10% to the out of pocket costs for a net total 25-30% rate increase.
No pre-existing condition. Several new cost contributors aside from Essential Health Benefits Mandate are assigned. Recent articles such as Kaiser’s Popular Provision Of Obamacare Is Fueling Sticker Shock For Some Consumers attributes new Pre-Existing condition waiver as a factor. Starting Jan 1, 2014 anyone with or without prior health insurance can get immediate treatment without a 12 month waiting period. “But the provision also adds costs. To a larger degree than other requirements of the law, it is fueling the “sticker shock” now being voiced by some consumers about premiums for new policies, say industry experts.” With the guaranteed issue there are unknown costs that cannot be accounted for just yet. Example: An uninsured individual we know is delaying needed surgeries until January for this reason. The member will pay a $250/month premium and get a $40,000 surgery paid for immediately. How many young healthy members are needed to offset this cost?
New Taxes. The IRS Affordable Care Act Tax Provisions is a handy itemized list. Several of these taxes such as MLR (Max Loss ratio) have been in effect. New 2014 Taxes estimate an additional 5.5% tax. See New Taxes and Fees: What They’re for and Who Pays Them:
- Transitional reinsurance fee. This is paid by fully insured and self-funded plans. The goal of the fee is to stabilize the individual markets by reimbursing companies who insure a disproportionately large number of individuals who are high utilizers of health care services. Fees will be collected between 2014, 2015, and 2016.
- Health insurance providers’ fee, also referred to as a health insurance tax, annual fee, and insurer fee. This will be assessed annually beginning in 2014 on health insurance carriers. The total amount to be collected in 2014 is $8 billion. The tax is based on premiums and by some estimates is expected to have a cost impact of 2 to 2.5 percent in 2014, and higher in subsequent years.
- Exchange fee. For 2014, our state’s online exchange marketplace is funded through federal start-up grants. But states that run their own exchange, such as Washington, have been tasked with implementing a funding mechanism after 2014. In the session that ended in June, the Washington State Legislature approved a funding plan for our exchange that authorizes the use of a current insurance premium tax for the qualified health plans (QHPs) sold in the exchange and, if necessary, an additional assessment on carriers who sell QHPs through the exchange.
- Patient-Centered Outcome Research Institute (PCORI) fee (also known as comparative-effectiveness fee). Health insurance issuers and sponsors of self-funded group health plans will be assessed this annual fee beginning in 2012 and ending in 2019. It funds patient-centered outcomes research. PCORI is a nonprofit corporation whose mission is to help people make informed health care decisions, and improve health care delivery and outcomes. The Group Health Research Institute has received two research awards from PCORI to study ways to improve care for back pain, and connect patients with community resources.
Essential Health benefits. The quintessential question asked is why are my rates going up so much this year has multiple answers with new Essential Health Benefits leading the way. The Essential Health Benefits Not Delayed article explains that The Affordable Care Act mandates that the plans include ten essential benefits, from care for pregnant mothers to substance abuse treatment. Popular local plans such as Healthy NY and Brooklyn Healthworks have afforded coverage for over a decade are are missing Mental Health, Chiropractic, and have a $3,000 Rx limit. All Individual Healthy NY and Sole Proprietors are terminating this year . Existing small businesses must buy the full version with Essential Health Benefits.
CASE: A Healthy Ny client just had an increase for singles from $412 to $519. She is a successful generous Caterer who is covering majority of a staff of 10 employees which is unusual for that industry. Her staff had an affordable benefits as well. They loved paying only $20, her Rx copay was only $10/generic and $20/brand for providers she did not have any deductibles. Hospitalization had full coverage with a modest copay. Statistically nearly 90% do not use more than $3,000 Rx. her new plan rolls automatically into the GOLD PLAN increasing her premium 25% along with a new $600 deductible on all benefits and a $40 copay for Specialist. She asked me I thought the new tax was only .9% medicare tax but evidently this IS HER NEW TAX.
So much for if you like your plan you can keep it promise. Even supporters such as Former President ClintonWeighs in on Obamacare. “Obama should honor his health-care promise: Pres. Clinton”, He personally believes President Barack Obama should honor his promise that people who have and like their insurance can keep it.
Do not under estimate the power of the Bill. The President is reviewing ways to allow some to keep their health plan but this would only apply to policyholders losing coverage. Stay tuned.
You can download the complete Essential Health Benefits NYS. Also, for a downloadable guide on self-insuring and secondary market reinsurance for your group please send contact form below. In the meantime, please visit to view past blogs and Legislative Alerts at https://360peo.com/feed.