DALLAS, TX: Health insurers are notifying policyholders about their premium increases; some increases will be significant, other small. But there are too many factors affecting those premiums, both actuarial and political, for either pro- or anti-Obamacare forces to claim victory.
In a new publication from the Institute for Policy Innovation (IPI) entitled “What’s Behind Those Rising Health Insurance Premiums?” IPI resident scholar Merrill Matthews, Ph.D. explains the numerous variables involved in setting premium rates, including the following:
- Actuarial estimates are an educated guess;
- Future premiums can reflect past mistakes;
- HHS has a 10 percent red-flag cap on premium increases;
- Politicians and bureaucrats are pressuring insurers to keep premiums down;
- Some people are still in noncompliant plans;
- Some states already had very high rates;
- Easy penalty avoidance could affect the participation rate;
- Perverse incentives behind the medical loss ratio;
- Lower premiums don’t always mean lower costs; and
- The shift to high deductible plans will lower rates.
“Democrats who voted for the law will use political pressure to try to keep those premium increases down, and that may work—for a few years,” said Matthews. “But the ACA’s structure and disregard of actuarial principles will increase inefficiency, and its economic incentives will encourage more utilization.”
“Both trends will force health insurance premiums up. If there are no significant changes to the law, and soon, in a few years we will all be paying a lot more for a law that was supposed to cost us a lot less.”
The Institute for Policy Innovation (IPI) is an independent, nonprofit public policy organization based in Dallas. Copies of "What's Behind Those Rising Health Insurance Premiums?" are available at www.IPI.org. IPI resident scholar Merrill Matthews, Ph.D. is available for interview by contacting Erin Humiston at (972) 874-5139, or erin@ipi.org.
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