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Health Insurance Rate Hikes – Top 3 Reasons

Article by Phil Rubis

With the passage of the affordable health care act of 2010 in the US, the promise and hope of folks who supported the plan was that the plan would ultimately reduce the costs of healthcare for everyone in the USA. The new health care law of 2010 is designed to gradually get into effect by 2014. Step by step, insurance companies will be required to cover more and more people with pre-existing conditions, and by 2014, the promise is that everyone in the US, regardless of their health condition, would be able to receive affordable health care.Have you noticed a <em>health insurance rate increase</em> recently? Many have noticed their health insurance premiums go up. So why have insurance companies just months after the initial stages of the law have come into effect increased the health insurance prices, by as much as 20%-30%? Is this just a transitory effect? We know that the law required wealthy Americans to pay more into the healthcare fund. So why is everyone, including the corporations, compelled to pay more for their health care costs?In this article we will offer three possible reasons why the health insurance prices are rising. By reading them, you may get a hint of how you may be able to optimize your healthcare coverage during this interim period between 2010 and 2014, and get prepared for 2014 and onwards. The three reasons for rising healthcare prices that we can see are: normal health care cost increases due to improvements in technology and access to new drugs and technologies, insurance companies compelled to insure some people with pre-existing conditions, and both the individuals, and insurance companies hedging against further cost increases over the next few years.<strong>Health care cost increases due to introduction of new technologies and drugs</strong>In free economies like the US, companies are free to perform research into new health care technologies, and drugs. This research does not come cheap. The companies can and do pay for this research by setting the price of their products, either medical devices, or drugs, appropriately. This is one of the reasons why health care costs have been going up much faster than the inflation over the past 20 years. As the costs of health services and drugs increases, so does the cost of health insurance that covers these costs. This component of the price increase is nothing new.<strong>Insurance companies compelled to insure pre-existing conditions</strong>In 2010 as the first part of the new health care law first got into effect, and insurance companies were not allowed to reject the health insurance application of children under 19 years old even if they had pre-existing conditions. Most insurance companies reacted to that restriction by discontinuing to offer health insurance to children only for all children under 19 years old. Some insurance companies allowed individual applications of a parent and a dependent child. These actions of insurance companies are understandable as they want to protect their profits. However, some of these actions were against the age non-discrimination laws in certain states. So insurance companies today are accepting applications of children under 19 years of age, but it is not clear how they handle applications indicating pre-existing conditions.One of the possibilities is to increase the premiums of children with pre-existing conditions, and the other is to increase premiums of all applicants, to cover for payments to the high risk applicants.<strong>Individuals and insurance companies hedging against further cost increases</strong>As more and more individuals get the sense of what is happening with the prices, and as the health insurance companies see their earnings erode, there can be two different consequences. First, the individuals may feel like this is the good time to go see doctors while it is still not as expensive as it might get over the next few years. Likewise, the insurance companies feel that, as bad as it is, it might still be easier to generate profits today versus what it will be like in a few years when they will be mandated to cover <em>everyone</em> with or without the pre-existing condition. So they raise the prices now to hedge against the uncertain future.

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It is not all bad when it comes to the new health care law of 2010. To find the plans that are available today because the plan got into effect, check out site http://highdeductiblehealthplan.org, especially the section on small business health insurance costs.

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