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The filing process of the 2018 health insurance premium rate is underway. This is an issue which will outline the factors which underlie the setting of premium rates and highlights the main driving factors behind the reasons that the 2018 health insurance premiums are going to be different from that of the previous year, 2017. It concentrates mainly on the individual market but there are many factors which are also relevant to the smaller group markets too. Read on the concerns of this post to know more on this.
Health insurance premiums reflect different factors
The health insurance policy makers decide the premiums which are based on the projected medical claims and the administrative expenses for the individual pools or groups along with insurance. Which are the factors that have an impact on the proposed premiums?
Who is covered under the policy? What constitutes the risk pool?
Pooling risks let the costs of the less healthy to be reduced by the healthy. Generally, the riskier the pool is the more predictable and stable the premiums will be. However, the composition of the risk pool is vital. Though the ACA or the Affordable Care Act prevents insurers from charging disparate premiums from the clients based on the status of their health, yet the levels of premium will reflect the status of the health pool. When a risk pool disproportionately averts those which have got better expected claims, premiums will definitely be lower.
Predicted medical expenses
Majority of the premium dollars are utilized for paying medical supplies and services and this reflects unit costs, the intensity and mixture of services and plan design. Utilization and unit costs may vary due to the geographic location due to the usual practices of the region as per a health plan which depends on the ability of the insurance company to negotiate fees.
Other components of premiums
Premiums should cover all sorts of administrative costs which include those which are related to product development of insurance, enrollment and sales, claim processing, regulatory compliance and customer care service. They should also cover assessments, taxes and fees and also risk profit and other charges.
Legal rules and regulations
There are several laws and regulations which include the presence of programs which share risk and which can affect the composition of risk pools, predicted medical spending and the total amount of taxes, fees and assessments which require being included in the premiums.
Health insurer fee
The health insurance provider fee was something that was enacted after the Affordable Care Act. The Consolidated Appropriations Act of 2016 includes a moratorium on the fee collection in 2017. Insurance companies eliminated the fee from the premiums of 2017 which resulted in the reduction of premiums by around 1-3%, regarding the size of the insurance company and their profit/non-profit status.
Hence, as we see, the changes in premiums faced by the individual consumers will reflect increase in age, especially for children due to new and child age factors. Whatever it is, you will be notified by the insurers or by the states so that you can take required actions.