So Why The Increases in Health Insurance Premiums?

by Michael on June 15, 2011

in Health insurance,HSA Health Savings Accounts

Can a person do ANYTHING to protect themselves from huge health insurance premium increases? Well, the best thing a person could do is control the cost of medicine. But since you and I cannot do this, and apparently the ones in charge of things cannot figure out that this is the fundamental problem, what can you and I do to protect ourselves?

As many of you know, I am a big believer in Health Savings Accounts paired with a High Deductible Health Plan. If a person does a cost analysis of what the cost of heatlh care is and compares having a plan like this with a typical PPO or HMO plan, in all but the rarest of examples they will come out ahead … and in most cases … way ahead.

But you’d think that having high deductible health plan (which generally means no utilization except in catatrophic situations) would mean that a person would not be getting rate increases. Sadly, that is not the case.

Here is how it works: if you are a health insurance company and you think that you are going to have some major costs shifted from the government to you [the big bad insurance company] you are going to act to protect yourself.

Since rate increases have to be approved, its prudent to plan ahead. What are the chances that a company is going to get a 200% increase approved? What are the chances that you, the consumer, would keep the policy even if it was approved? Zero, Zilch on both counts.

But what if they raised the premium 21% this year, and 17% next year, and 23% the following year, etc.? What then?

Might this be approved? Yes.

Might you keep it? Yes.

Lets create an example: You have a plan for your family with a $10,000 or higher deductible and no drug benefits. Would that qualify as “high deductible” to you? (I usually mean less than $5,000 when I use that term). Now imagine for a moment that you are paying about $252.00 per month for this $10,000 deductible plan with no drugs benefit.  And the company raises your premium on this plan that you’ve never utilized by 21%. How much is that?

Try $635 per year!

But what if you had a “normal” PPO plan and you were paying about $1,000 per month and the company raised your premium 21%.

That’s an increase of about $2,500 dollars. How does $635 dollars sound in comparison?

These examples I am giving are based on real scenarios. [I rounded some numbers but the basic facts are as illustrated].

So whereas I can not solve the problem for the country as a whole – I can help you – as an individual/family find reasonable solutions to the dilemmas created by politicians.

Call me or email me for more information. I can be reached at 209-498-3010 or 209-390-1163.

I am looking forward to talking to you.

Michael Myers

 

 

 

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