Rising Rates Under Obamacare

UntitledHealthcare costs have been on a steady rise for the last several years, so it’s not really surprising that health insurance premium costs have been rising alongside them. As we near the implementation date for most of Obamacare’s requirements (January 2014), you can expect even higher rates. There are several reasons for this, but chief among them are adjustments that insurance carriers must make to incorporate the new pieces of the law.

Changing Aspects

Carriers now must accept everyone who applies, which is also known as a guaranteed issue. This continues into aspects of pricing, since insurance companies can’t charge more premium dollars for someone with a history of health problems, either. The final changing aspect is that carriers must now provide coverage for a variety of services that were not previously covered by insurance. Some of these issues have already been tackled by certain states, including New York and New Jersey, already. The guaranteed issue requirements enacted in these states and others became incredibly expensive.

What About the Penalty?

Yes, there’s a penalty for failing to get insurance coverage. For some families or businesses, however that “tax” doesn’t provide enough of a negative incentive to get them to purchase coverage. So, some people will forego coverage in the short term, and then get it when they become sick (which could also help to drive prices up over the long run, too).

Short Term Versus Long Term

Of course, in the short term many people and even companies are going to feel the burden of something expensive on the horizon, but this is to be expected. Like many government programs, it’s going to take time to see how it works out and for new regulations and efficiency considerations to be put into place. Knowing that government already moves relatively slow, it could be years before prices even out. Like other social welfare programs or higher taxes, bottom lines will be affected as more programs are provided to people, but therein lies the great challenge: providing social programs and support while trying to keep costs down.

There are certainly debates among policymakers and the public about whether the higher costs are worth it. Since nothing on this grand of scale has been attempted in the few decades by government, expect some trial and error and continuing changes. It will certainly take time for all of the pieces to fall into place. In the meantime, one of the benefits of an insurance exchange is the chance to shop around, so agents and the public shouldn’t feel like they’re trapped.

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