Lack Of Cost Transparency
Related to the lack of consumerism in healthcare, even if more people wanted to consider costs, lack of price transparency makes this difficult. There is no uniform or quick way to understand treatment options and the costs associated with them, and medical billing is often difficult for most people to understand.
Fewer Plan Options And Smaller Provider Networks
Finally, health insurance companies know they have to control costs somehow to cover more people. While they do this fairly effectively given all the upward price pressures just discussed, this control comes at a cost to the consumer. Many carriers find themselves limiting the number of plans in their portfolios and the provider networks within each plan. Consumers in many markets are finding fewer plan options and have reduced access to doctors and providers.
When Does This Increase In Contributions Occur
In most cases, an increase in premiums occurs in January, being accounced in November. However, there is an exception of 2 or 3 insurance companies where the increase takes place in spring. You will receive a letter about adjustments to your health insurance premium if youre privately insured. This polite wording in German: Beitragsanpassung usually means that your monthly contributions will increase the following year. This may come as a shock to some and may seem a little unfair. But the reality is, the health insurance premiums increase is something that happens regularly. This is regardless of your insurer, your specific insurance agreement or whether you are publicly or privately insured.
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Why Do Health Insurance Premiums Increase
We look at the factors that contribute to rising health insurance premiums
24 January 20183 min read
Each year health insurance premiums are revised in line with whatâs going on in Australia. This can make some people feel like their premiums are constantly on the rise. These rises arenât random, there are three main factors which tend to contribute to an increase in health insurance premiums.
Rising Costs Of Medicare And Medicaid
Government programs like Medicare and Medicaid have increased overall demand for medical servicesresulting in higher prices as well. Whats more, increases in the incidence of chronic conditions such as diabetes and heart disease, especially among seniors, have had a direct impact on increases in the cost of medical care. Chronic diseases constitute 85% of healthcare costs, and more than half of all Americans have a chronic illness.
Demand for medical services has increased because of Medicare and Medicaid, resulting in higher prices.
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As he blazed/thrashed/insulted his way to the White House, one of Donald Trumps constant talking points was that Obamacare was not working.
According to Trump, it was a disaster that only he could fix. His criticisms have certainly beencreative.
Whether he can actually fix it remains to be seen, but he was right about one thing: insurance premiums are on the rise. Its estimated that in 2017 premiums will go up by approximately 24%.
But why exactly is this happening? What are the root causes?
Can Insurers Charge The Unvaccinated More
This is a really interesting question and depends on the type of insurance.
Life insurance companies have the freedom to charge different premiums based on risk factors that predict mortality. Purchasing a life insurance policy often entails a health status check or medical exam, and asking for vaccination status is not banned.
Health insurers are a different story. A slew of state and federal regulations in the last three decades have heavily restricted their ability to use health factors in issuing or pricing polices. In 1996, the Health Insurance Portability and Accountability Act began prohibiting the use of health status in any group health insurance policy. And the Affordable Care Act, passed in 2014, prevents insurers from pricing plans according to health with one exception: smoking status.
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Why Do Health Plan Costs Increase Every Year
If you own a business that offers a group health insurance plan, you may notice that the group rates go up every year. Your employees definitely notice Its not always easy to explain premium increases, so weve provided a guide to help your employees understand why they must pay more for health insurance every year.
Before you can explain why rates go up, first you need to understand how premiums are set. This is a fairly complex calculation, but there are basic principles thatll explain the process.
In the simplest terms, health insurance companies base their premiums on the amount of money they paid out in claims in a previous year, according to finance website ThisMatter.com. Then, they set premiums for subsequent years based on a series of complex statistical analyses of past claims by their insured members. The object of these analyses is to predict losses, or claims, in subsequent years. Simply put, insurance companies make educated guesses.
Why Premiums Go up Every Year
If health insurance companies base group rates in part on claims from previous years, why is it that those payouts increase every year?
Regulations Affect Pricing
Living With Rising Premiums
Having A Claims History
As far as insurers are concerned, a history of claims increases the odds that youll make another one. Home insurers, for example, share information about claims from the last seven years through the Comprehensive Loss Underwriting Exchange , which can boost your premiums even if you werent the homeowner who made the claims. Car insurance claims are also registered by CLUE, and your rates may increase if youve made a lot of claims even if you werent at fault because you pose a higher risk, statistically speaking.
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Is Your Sum Insured Sufficient
Maybe you opted for the minimum sum insured at the time of purchase or higher and you realize your coverage is either too less, or too much for your needs.
Most insurers will give you the option to increase your sum insured at the time of renewal. They may ask you reasons why and based on the same increase your health insurance premium basis how much you decide to increase your sum insured by.
Rise Of Chronic Illness And Obesity
Did you know 6 in 10 adults in the U.S. population have a chronic condition, such as asthma, heart disease or diabetes? 4 in 6 have two or more chronic conditions. Chronic illnesses combined with an aging population drives up costs. Additionally, 42% of adults are obese, which leads to additional health conditions with estimated costs of $147-billion annually.
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What Are The Benefits Of Health Insurance
The value of health insurance remains more vital than ever, with benefits including:
- Avoiding public hospital waiting lists for future surgeries
- Your choice of doctor and
- Great-value extras.
Plus, youll have peace of mind that if something goes wrong for you , youll be well-positioned to get the care you need as fast as possible.
Make sure you regularly review your policy and compare to make sure its a good fit, based on your personal needs and circumstances.
You should consider the following steps when your health insurer gets in touch about your rate increase.
Average Premium Price Change
The average premium price change for each insurer is calculated according to the following formula.
A revenue based measure, such as the percentage change in forecast contribution income is considered to be the most appropriate way of reflecting the price change in premiums that will be received by an insurer. This method is less biased by extremely low changes for particular products and/or distortions arising from wide fluctuations in the number of policies covered by a particular product, compared to other methods such as simply averaging out the premium changes for individual products
The industry weighted average premium change calculation formula is outlined in the Private Health Insurance Rules 2012 . It specifies the industry average premium increase being the average change in premiums for each product subgroup offered by every private health insurer, weighted according to the number of people covered under complying health insurance policies in each product subgroup.
The insurer and industry weighted average include the impact of the savings from rate protection and age-based discounts.
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Do The Relevant Paperwork
Once you are there, you need to fill a proposal form for portability with your new insurer, where you need to put down details of previous year policy copies, medical history with pre-existing diseases and past claims and then apply for portability. Along with the proposal and portability forms, you then need to submit the relevant documents, such as identity and residence proofs, medical history, past claims and newly diagnosed disease, if any, previous policy certificates, self-declaration in case of no claims etc.
How Much Has My Funds Premiums Increased
If your premium has increased, your health fund is required to notify you in writing and you will receive updated policy information with more information about the change.
If your increase was higher than the average, the fund has been able to demonstrate that the rise is necessary to cover the benefits offered by your policy. Such increases are generally an indication that the particular health fund policy has been previously underpriced.
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Change In Coverage Benefits
During your health insurance renewal, you can choose to make changes in your coverage and benefits, depending on your insurers terms and conditions.
You may choose to do this due to the fact you realize you need more coverage or due to change in personal circumstances too
So, in case you do make changes such as opt for an add on or decide to increase your sum insured then your health insurance premium too will increase based on the same.
What can you do about it?
The best thing to do in this case is to review your health insurance plan in detail, this way you can see what your coverage and benefits are, and if they make sense for your increasing health needs or not. You can explore and upgrade to other plan options too with your current insurer.
Another thing you could do is, compare other health insurance plans online just to see if theres any other plan out there that is better suited for your current situation.
What Can I Do To Minimize The Increase
During these periods of reduced competition and increased premiums, our recommendation is that you speak with your insurance broker to understand your full range of options. Its important to make sure your broker has access to a very wide range of insurers, because the difference between the highest quote and the lowest quote will be larger than normal. If you still cant get a quote that makes sense for you, your broker may suggest a higher deductible to keep your costs down.
Want to add to this story? Let us know in comments below! Mitchell & Whale is a fast-growing insurance brokerage in Ontario, striving to make insurance _not suck_ one customer at a time. Give us a call today to discuss any of your insurance needs at 1.800.731.2228.
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Review Your Level Of Cover
Your renewal may be a good time to review your cover and make sure it still suits your needs. If you want to reduce your premium and you’re currently covered for extras such as optical and dental treatment, doctors’ visits and prescriptions, consider changing to a plan that covers you for major medical treatment, diagnostic tests and specialist consultations instead. View our plans to learn more.
Why Do Healthcare Costs Keep Rising
Its no surprise that Americans spend a huge amount of money on healthcare each year. High insurance premiums, high deductibles, co-pays, and other out-of-pocket expenses are just some of the costs associated with health and wellness in the country.
Still, theres more to rising healthcare costs than government policy. Read on to find out how much the United States spends on health costs, which factors shape prices in this industry, how the COVID-19 pandemic changed the entire cost structure conversation, and how recent legislation offers both hope and help.
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What Else Can Affect The Level Of Pricing
Level of competition in the market: Like in any industry, healthy competition helps to bring prices down for customers. The number of insurers who will be actively competing for your insurance increases when they believe that premiums are at a profitable level. As a customer, you usually wont see new insurance companies enter the market, or existing insurance companies leave. What does happen behind the scenes is that insurance companies will either want more business , or wont . They will focus on selling certain types of insurance that they feel are more profitable, and will avoid selling insurance that they think will lose them money. A recent example of this would be in the hospitality industry where many Canadian insurance companies have stopped offering insurance to this kind of business . Of course, the remaining insurers now have less competition, so they will increase their prices and be very selective about which hospitality businesses they choose to insure. That causes a big problem for high-risk hospitality businesses that, in some cases, cant find insurance at all.
How Premiums Are Determined
Each year, insurers calculate the cost of paying for healthcare for their covered lives as well as their operating costs. Even non-profit entities pay their executives and staff, and these salaries are all part of their operating costs. Your premium is the income that health insurers bring in to cover all of these costs.
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Services Growing And Aging Population
Healthcare gets more expensive when the population expandsas people get older and live longer. Therefore, its not surprising that 50% of the increase in healthcare spending comes from increased costs for services, especially inpatient hospital care. Nor is it a shock that the two next highest factors increasing such spending are population growth and population aging .
Consider Your Ability To Protect Yourself From Future Losses
Planning to secure a health insurance plan? Aside from paying attention to the premium rate right now, you should also consider your ability to hedge against future losses. Also, when increasing the price, some insurers will consider raising the coverage rate as well. Lastly, pay attention to whether the coverage rate provides you with better coverage or if it’s just small bonuses.
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Now could be the time to begin experimenting with those homeopathic cures weve been hearing about all these years, like rubbing cucumbers on our feet or bathing in olive oil.
Purchasing hundreds of gallons of olive oil is probably cheaper than premiums will be.
Time To Change Insurers
Health insurance premium shooting through the roof, claim taking unusually long to settle are just some of the reasons policyholders may want to shift to a new health insurer or in other words, port. Before you decide to port to a new insurer, remember that you can port only to a like policy. For example, a shift from an individual plan to a family floater policy or a general insurer to a health insurer is allowed but that from an indemnity plan to a critical illness plan is not. Here’s the process of porting health policy.
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Why Does Health Insurance Premium Increase On Renewal
Have you noticed that your health insurance premium increases on renewal and youre not sure why this happens? Read on to find out why health insurance premiums increase every year, how you can reduce this increase and what are some renewal benefits you can avail with Digits health insurance.
Right from your pay, your house rent to the price of fuel and food. Time and inflation affect expenses of your life, including that of your health insurance premium.
And like most things in life, one of the primary reasons for this increase is due to inflation. This may surprise you but the inflation in the healthcare industry is a lot higher than most other industries. However, apart from healthcare inflation there are also other reasons why your health insurance premium may increase on renewal such as your age, your coverage benefits, claims youve made during the year, and of course your overall health and wellbeing as well.
Lets deep dive into each of these causes and see why your health insurance premium increases on renewal, and what you can do about it.