In Employee Benefits, Health Insurance

Exclamation_markYou knew it was coming.

You’ve probably heard health insurance premiums ares going up. The highest announced increase in South Dakota has been 63%. These are decisions that insurance companies don’t take lightly. The health insurance market is more competitive than ever. A market of less than a million people in South Dakota makes their job even harder. They have to provide a great product at a fair price and follow it up with great service.

What’s the cause?

The cost of insuring people on new ACA compliant plans is the big driver here. Remember, health insurance companies aren’t allowed to ask any medical questions on new applications. They can ask how old they are, where they live and if they smoke or not. But not if they’ve had any serious medical conditions. So what’s driving costs? Here’s some of the bigger factors.

  1. The insurance companies knew going in that this group would need more healthcare, they just didn’t know how much more. It turns out, they needed more than they anticipated. Which meant paying out more in claims than they received in premiums.
  2. How does that happen? This group of people had higher claim costs. Which means the services they needed were more expensive. Unless you’ve been through a catastrophic event, claims being in the $50,000.00+ range are hard to imagine.
  3. They also utilized prescriptions more often and of those prescriptions, there was an increase in specialty drugs. If you take prescriptions on a regular basis and want to find out how much your medication really costs, do a little experiment. Call you pharmacist and ask them how much your medication would cost without insurance. You might be surprised at how much the insurance company is actually covering.

Final Word.

I’m not trying to make excuses for insurance companies. I am trying to say that there are still a lot of adjustments that need to be made in order to accommodate the new ACA rules. And until enough data is collected where insurance companies can price products accurately we’ll see pricing volatility.  Like I said in my last post though, you are in charge of your healthcare dollars. And if you want to control those costs you have to be engaged. Ask questions, have a great day and engage.


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