Health insurance costs spark worry among states
Rate shock is becoming a common term in the U.S., especially in the world of insurance news. The term refers to a steep increase in insurance premiums, an increase that policyholders are both unprepared for and unable to accommodate. Rate shock is most often related to the issue of health insurance and the Affordable Care Act. The controversial federal law will take full effect in 2014, and U.S. insurers have been warning that rate shock may be one of the unintended consequences of the health care law.
Insurers warn that rate shock could be a reality
Insurers are not the only one suggesting that rate shock may soon be a reality. Several states have begun expressing concern over the cost of health insurance coverage. The Affordable Care Act, which aims to make coverage as affordable as possible for many consumers, is now expected to cause a significant spike in health insurance premiums. This is due to many of the law’s provisions that put harsher requirements on the country’s businesses and new regulations governing the health insurance industry.
Affordability becoming a primary issue
As the law inches closer to becoming fully actualized, the major issue that states have begun facing is one of affordability. Over the past two years, many states have highlighted the law’s provision for mandatory health insurance coverage as a major point of contention. Now, however, the costs associated with health insurance are suggesting that coverage may not be as affordable for consumers as the federal law had initially intended.
States express concerns over rising premiums
California insurance regulators, who initially embraced the federal law, recently issued a letter to the federal government warning of “rate and market disruption” due to the new law. Oregon Insurance Commissioner Lou Savage suggests that health insurance premiums in the state will rise by an average of 30% due to the Affordable Care Act. The same trend is being seen in Massachusetts, where state officials claim that consumers will see rising premiums beginning next year as the law becomes fully implemented.