We are half way through 2015, and talks of open enrollment changes and insurance rate hikes have already begun. As the insurance world still learns how to remain competitive and profitable in the post-Affordable Care Act era, companies continue to struggle with how to provide care while retaining their enrollees.
Obamacare 2016 Predictions
Experts believe that Americans participating in Obamacare insurance plans will face increases as high as 35 percent in 2016. Although many are relying on subsidy increases to offset the rise in cost, experts are not so sure that this will be the case.
In fact, many have warned participants that out-of-pocket costs and deductibles will also be adjusting, so everyone will soon feel the financial effect in 2016. Although these rates are only proposed at this stage, experts find it hard to believe that a plan proposing a 35 percent increase will drop it down to 5 percent.
Reasons for the Rising Costs
Many can speculate about what is causing the spike in insurance plan rates, but there are a few facts that make the reasoning evident.
Obamacare plans now have data from the 2014 insurance cycle. They have a better understanding of what their participant pool looks like, making it possible to estimate what expenses the carrier will face in the future since medical information and data has been recorded. Increasing deductibles along with coverage prices will make it possible for the insurance plans to be more financial prepared.
Additionally, drug prices continue to soar and plans need to increase their revenue in order to cover those costs.
How Others are Facing 2016
Insurance carriers are deciding what is the best option for them as a company, moving forward. Can they grow with the new reform model or is their business plan, simply not set-up to thrive under new circumstances? Increasing insurance rates is one route to take, while merging is another.
Many companies have tread lightly and avoided mergers in the last few years, waiting to see how everything with the ACA was going to pan out. Now that there have been a few insurance cycles under the new reform law, there are some smaller companies considering getting out of the insurance game. Larger companies are looking to trade up and diversify their portfolio of participants by acquiring or merging with existing, smaller insurance carriers.
Experts expect to see this as a growing trend in the next few years.
What are your thoughts about the changes to come in 2016? Will insurance carriers price themselves out of the market or will the public be forced to pay the steep increases?