Paying astronomical amounts for health insurance? Dramatic increases in the cost of health insurance due to the instability of the American marketplace have affected the consumer, especially over the past three years. Since the passage of the Affordable Healthcare Act (“ACA”) a/k/a Obamacare, the cost of individual, family, and group health insurance has steadily increased. With several states recently announcing their rates for health coverage for 2019, the trend, unfortunately, looks like it is going to continue and there are no proposed solutions at this point that appear to provide any relief to the American public.
The first projections are in and most expect rate increases of up to 30% for 2019. Maryland and Virginia were the first two states to announce the rates filed by their insurance companies for 2019 and while these submissions are not final, they do serve as a good indicator of what to expect during the upcoming Open Enrollment period, allowing individuals to purchase ACA plans on their respective state-sponsored exchanges. This period commences November 1 and lasts until December 15th each year. In Maryland, two insurers requested 30% increases with an average monthly premium of $592 per month up from $449 per month in 2018. This increase affects nearly 212,000 people in Maryland who are insured from its exchange. Carefirst and Blue Shield requested an average rate increase of 18.5% for its HMO plan and a whopping 91.4% for its PPO plan—shocking numbers to say the least.
In Virginia, insurers sought a 26.6% rate hike for HMO plans and 64.3% for PPO plans. Some requests were more stable—Cigna Corp. filed for a 15% increase and Piedmont Community HealthCare requested an 18.3% increase. Last year, individual rates went up about 30% over 2017, namely due to “uncertainty” in the marketplace as congressional Republicans worked to repeal and replace the ACA. Repeal efforts ultimately failed, however, the repeal of the individual mandate penalty and the proposed extension of short-term plans from 90 days to 364 days have once again given the insurers pause for concern. Beginning January 1, 2019, individuals will no longer be penalized for not having ACA mandated health insurance. Insurance is all about risk—these companies spend millions on actuaries whose job is to assess risk on a regular basis. So it stands to reason that when those risks appear to be more “uncertain” rather than more “certain,” costs will inevitably go up. Although repeal efforts have subsided, questions remain about how many people will actually sign up for individual coverage in 2019 without a mandate in place and there are questions as to how “sick” and costly that group will be. Moreover, speculation that cost-sharing subsidies, which allow the poorest Americans to get subsidized Obamacare, are still in jeopardy of being removed or diminished, and this speculation contributes to the anxiety of American insurance companies. Just like 2018, the health insurance landscape is no more certain than it was last year and the rates will unfortunately likely reflect this reality next year.
Here are the 15 states where health insurance costs are expected to go up the most in 2019:
- South Dakota 11. Montana
- Alabama 12. Indiana
- North Dakota 13. New Hampshire
- Rhode Islands 14. Georgia
- Arizona 15. Illinois
- Nebraska
- Texas
- Wisconsin
- West Virginia
- Delaware
Employer-sponsored plans, by contrast, are much more stable. Last year, the American worker saw a 4.3% increase in health benefit costs. During the five years prior, the average annual increase for large group employer-sponsored plans was about 3%. Despite the fact that employer and worker premiums are still rising two to three times the rate of general inflation, the percentage increase won’t come close to the premium increases individual Americans are expected to face should they seek ACA-compliant coverage this fall for 2019. Employers appear to be more immune from the issues plaguing the ACA’s unstable individual market and its risk pools of sick patients whose costs far outweigh the number of healthy Americans signing up. Why is this the case? One explanation is that the stability achieved in this market is due in part to employers taking action to offer plans with higher deductibles, higher co-pays and overall less coverage thereby keeping costs to the employee lower than the costs individual payers find on the state exchanges. Either way, the American worker still loses with drastically reduced coverage being offered by their employers. They are just losing less than their self-employed counterparts facing double-digit rate increases.
What can consumers do to minimize the financial impact of the rising cost of American health insurance? First and foremost, finding a reliable health advisor to guide them through the maze of state-sponsored exchange plans and to navigate available private options. With the penalty no longer in existence, individuals and families no longer are required to purchase an ACA plan. There are several private options that provide comprehensive coverage with adequate day-to-day benefits for doctor visits, prescriptions, urgent care, and concierge doctors, and yet still provide unlimited major medical coverage if something catastrophic happens. Bottom line—finding a trustworthy health insurance advisor to shop the market for the best and most affordable options is key. No different than buying a house, a car or new lawn mower—-shopping and research with a knowledgeable advisor, will save money and secure a better deal in the end.
For employees with group plans whose employers pay all or a portion of their monthly premiums, they can rest assured that those plans will most certainly be the best option. That said, most employer plans do not fully cover or contribute any amount toward spouses and children. Once again, employees should obtain alternative quotes for covering their spouse and dependents to see if a better rate with the same, if not better coverage, can be obtained. As noted above, group plans tend to have high deductibles which are how they have managed to remain somewhat stable in a volatile marketplace. High deductibles—the amount consumers must pay annually before the insurer kicks in with any coverage—-are what will hit consumers’ wallets and affect finances the hardest. Lower deductible plans with better pricing may be found on the private market by making a simple phone call to a trusted health advisor. It is definitely worth the extra effort.
In summary, rising health insurance costs have become a fact of life for Americans. There is speculation that insurance premiums for the ACA will jump 35 to 94% over the next three years if the current trends continue. The only advice to deal with this dilemma is (i) choose not to participate and go uncovered—clearly not a preferable choice when one of the leading causes of personal bankruptcy is unanticipated and uncovered medical expenses; or (ii) secure a trusted health advisor who can navigate the rough seas ahead and secure the best possible option in terms of coverage and price depending upon the consumers’ needs.
