Health Insurance Rate Increases

Health insurance rate increases may reflect changes in the way medical services are used or trends in the cost of health care. At one time, insurance companies had the ability to raise rates without clarifying these reasons to consumers. Today, rate increases of more than 10 percent must be evaluated to determine whether higher rates are justified. [1] An expert review of rate increases will help consumers and businesses understand the cause of the rising cost of health insurance.

General Rate Increases

Insurance companies and health insurance networks raise rates for many reasons. Trends in the economy can increase the cost of doing business, which may result in higher rates for policyholders. At the same time, these economic trends may make it more difficult for consumers to pay higher premiums for their health insurance. Rate increases have made the process of finding affordable health insurance difficult for many individuals and families.

Changes in the utilization of medical services can also affect rates. If doctors and hospitals are ordering procedures or diagnostic tests more frequently, if the need for inpatient care is increasing, if the general population requires more extensive treatment for chronic illness, the costs of insurance may rise. The rising cost of covering consultations, diagnostic exams, surgeries, medical supplies and medications is eventually passed on to the consumer in the form of rate increases.

Insurance companies base their rate increases on current data and projected trends in health care costs. With the implementation of health insurance rate reviews, this data will be evaluated by experts in the industry if the proposed increase exceeds a certain maximum. In addition, consumers will have access to the information that is being used to justify these rate increases.

Individual Rate Increases

General health insurance rate increases can affect all policyholders. On a smaller scale, rate increases can affect the policyholders of a specific insurance company. When you apply for health insurance, an insurance provider will evaluate the level of risk you present to the company. Your risk level is based on your age, height and weight, health status, the risk level of your occupation and your tobacco usage.

To confirm this information, an insurance company may request medical records from your physicians with your permission. If you are applying for individual insurance rather than group coverage through a company, your medical history will be evaluated more closely. Based on this information, the insurer will classify you in a risk group to determine your rates.

Because the cost of insuring individuals with serious health concerns is higher than the cost of insuring healthy individuals, rates for high risk policyholders are higher. Once you are assigned to a risk group, a rate increase that applies to the group will generally affect the cost of your premiums. However, the process of reviewing rates and raising premiums may vary from one state to another and from one insurance company to another.

If you are insured under a group plan through your employer, you may notice rate increases over the course of your employment. These increases will reflect the higher cost of insuring the entire group. If you develop a serious health condition, your rates may not increase based on your individual claims; however, you may pay higher premiums if you require more extensive medical care.

Health insurance rate increases can make it difficult to keep up with your medical needs. To ensure that you're receiving the most competitive rates, compare the costs of insurance through several providers. You may find the coverage you need at lower prices through a different insurance company or a more economical plan.

[1] http://www.healthcare.gov/news/factsheets/ratereview09012011a.html

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