NCPA - National Center for Policy Analysis

Rising Healthcare Premiums

July 2, 2014

In nine of the 10 states that have filed their proposed 2015 insurance rates, the largest health insurers are increasing premiums between 8.5 percent and 22.8 percent for next year, reports the Wall Street Journal.

These proposals are a reflection of rising prescription-drug costs, medical inflation (around 5.4 percent for 2014) and the ACA's fees and coverage mandates, according to insurance companies. Notably, in the 10 states that have filed rate proposals, the insurers with the largest enrollments for 2014 are the ones who offered the lowest, or second-lowest, health insurance prices. Now, having gained market share, these insurers feel that they can raise rates. 

Insurers with low enrollments, on the other hand, are lowering their premiums in order to attract more customers. For example:

  • Oregon's Moda Health Plan Inc. was the insurer for 75 percent of the state's plans sold on the exchange. It is seeking a 12.5 percent premium increase next year.
  • Moda's competitor, Oregon's Health CO-OP, enrolled less than 1,000 Oregonians in 2014. It is looking to cut its rates by 21 percent.
  • If the price proposals are approved, Moda's mid-range silver plan for a 40-year old would rise to $249 per month, while Oregon's Health CO-OP would offer that plan for $228 monthly.

With rising premiums, many consumers may go with the cheaper rates. However, many insurers are waiting to see if the federal government will make renewing coverage easier than the many steps that were required to enroll in the first place. If so, consumers may retain their existing insurance plans rather than switch to a new carrier.

Source: Louise Radnofsky, "Premiums Rise at Big Insurers, Fall at Small Rivals Under Health Law," Wall Street Journal, June 18, 2014.


Browse more articles on Health Issues