Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Health insurance rates go up in a yearHealth insurance rates will almost always go up each year, sometimes very high percentages (think double-digit). Some people have reported premium increases of 67% over two years. It can happen because of the economy.

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In 2009, for example, folks saw a lot of health policy premium increases, possibly because the economic crisis. The economy went bad, people got sicker because of stress, and insurance claims increased.

How does the economy impact health insurance rates?

Also, people who were worried that they might lose their jobs went and stocked up on health care, so to speak. One company out of Washington State saw a 17.6% rate increase, in part because they had received a very unexpected $14 billion dollar increase in claims. Add that onto the fact that some of the companies themselves were losing millions in investments and it is easy to understand the massive hikes in premiums.

These increases are true for both group health insurance policies as well as individual policies. These premiums increase simply because of the increase in medical costs. Everything goes up every year. Drugs cost more. Technology gets more advanced and, hence, more expensive. Doctors charge more, maybe because their own liability insurance goes up. The rates go up each year for all these reasons, and more.

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How are group health insurance rates impacted?

With group health insurance, the policies will go up the same for all individuals and all families. It doesn’t matter how healthy a specific individual or family is; the rates go up across the board. This is because the insurer develops profiles of all its types of patients and figures out how much that patient-type will cost to cover, on average.

One profile may be for female children from ages 10 to 15. It will be determined how many times, on average, such a female child will need to go to the doctor, will need to get shots, will get hurt and need casts or medicines or stitches or X-rays, and so forth.

The insurance company will create a variety of profiles for such patients, from very young children to very old adults and, from these profiles, will come up with a total cost, which they will use to figure out the average cost for each individual and family. And there is your premium. It works pretty much the same exact way for an individual policy; however, your good health will mean lower health insurance rates while any issues will result in personally higher rates.

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How will the 2010 health reform bill impact rates?

Some things may be different with the recent passing of the 2010 US Health Care Reform Bill . Individual policies or private insurance will likely go up, possibly as much as 13%. President Obama has said that kind of increase will only affect those individuals who have chosen better coverage. On average, he says, a family policy under the new act that is the same as what they currently have, could be as much as 20% cheaper.

For individuals under the age of 65, who are purchasing their own policies (this is roughly 17% of the population) the premium rates will have a net increase of 10 to 13%. They could be up to 30% higher simply because the coverage will be so much better. Insurance companies must all offer maternity care, drugs, mental health, and substance abuse, and will have to cover pre-existing conditions.

To offset this, up to 10% of premium rates would be taken off because of how the market will be restructured. Rates will be lowered another 7 to 10% because of the increase of insured. Many of the newly insured will be healthy, which always leads to an overall lowering of rates.

If I’m healthy, do I really need insurance?

If you are healthy, it will almost always seem that health insurance premiums are a waste of money. You can spend thousands upon thousands of dollars in premiums when you get maybe one sinus infection a year, or something. Maybe you feel resentful that your good health is keeping the premiums down for those who are really sick.

There is not too much to do about these feelings, except to try to remember that most of us are all one car wreck or major illness away from economic problems, and our health insurance premiums are our way to protect ourselves from such financial catastrophes. Also, if you become pregnant or have children already you need this coverage.

Since these hikes in premiums are pretty much going to be unavoidable, you will want to shop around to try to find the best possible policy you can get for your income level. If you can’t get group health insurance through your work, use the free health insurance quotes tool to get online rate quotes to compare. No one knows the exact changes that we will see in health insurance in the next few years. So the smart thing to do is be prepared.

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