Insurance companies request aggressive rate hikes

Health insurance companies have submitted their proposals for new rates starting in 2016. As some others have pointed out, for the first time under the Affordable Care Act, insurers are setting insurance premiums with at least one full year of retrospective claims data (the 2014 rates had no ACA claims to look back upon, and insurers had to propose 2015 rates before the end of 2014). In several states, it appears that many insurance companies are asking for rate increases of 20 percent or more. What other consumer product or service jumps 20 percent in one year on a statewide basis?

Insurers offered a variety of reasons for the increases, including previously uninsured consumers now "catching up" on their medical care and a policy that lets some people stay on pre-ACA insurance plans (skewing the post-ACA risk pools). Oregon seems to be a bright spot, with the state regulator mandating higher increases than the insurance companies sought.

Apparently, consumers are able to somewhat shield themselves from the rising costs by changing insurance plans. However, as the article points out, doing so can come at the cost of narrow provider networks. Consumers are getting more and more exposure to the financial costs of health care through higher premiums and deductibles. As consumers continually try to minimize cost and health plans try to modify their offerings to accommodate, consumers will become more exposed to the concept that not all plans are the same. Previously, insurance plans had to compete largely on price; however, as consumers begin to experience narrower networks, there will be some pushback, and I expect insurance plans will end up competing on both price and quality... similar to other consumer markets.