The coronavirus has caused massive financial problems. Will next year cost health insurance policyholders even more?
The coronavirus has been a grim equalizer for American insurance. Those without health coverage have been left vulnerable, while many of those who were covered have lost that protection along with their jobs.
A July study by Families USA revealed that 5.4 million American workers found themselves unemployed due to the pandemic, which caused a record loss of health insurance between April and May 2020. And those who’ve managed to keep up their policy payments amid financial hardship may well be faced with significantly higher premiums next year.
It couldn’t come at a worse time for a country hopeful for financial recovery. In a multi-national poll, the U.S. had the highest number of people who have lost their entire income since the pandemic began, with the majority of Americans losing between 10% and 25%.
How bad could rate hikes get?
The worst predictions for 2021 foresee a double-digit increase in premium rates. When all the possible rate increases from insurers are considered, New Yorkers could be facing a weighted average increase of 11.7% on their current rates. Even that jump is a conservative estimate in some cases.
The New York Department of Financial Services (DFS) published two tables of the proposed increases by insurers. The highest increases were 19.1% for Oscar Health Insurance in the individual market and 29.1% for the small market, again from Oscar. Only two companies offering insurance on the New York individual market proposed a decrease in premium rates, while none suggested the same for the small market.
The DFS hasn’t approved these numbers, but they’re a good look at how many of the state’s insurers want to handle things in 2021. Policyholders obviously don’t want significant rate hikes adding to an already precarious financial situation. Are insurers offering any positive signs?
The New York HPA is in favor of an increase
The New York Health Plan Association (HPA) is responsible for over 8 million New Yorkers’ healthcare plans. The organization released a statement in June announcing its support of the proposed increases, even going so far as to label them “reasonable and fair.” The HPA considers the hikes to be justified, citing factors such as pandemic treatment, research, and prep for a possible future resurgence of COVID-19 as viable reasons to charge policyholders more.
The HPA also listed increased administrative costs from the pandemic as a further reason for the necessity of increased premiums. These factors include employee costs, regulatory costs, technology and innovation, fraud prevention, office and marketing expenses, and taxes.
The HPA’s stance may be indicative of the wider insurance industry, which likely means higher expenses for policyholders. It’s not unusual to see rate hikes following natural disasters like tropical storms, earthquakes, or floods. And COVID-19’s global toll saw New York as one of the hardest-hit locations. So, it makes sense that we’d see more significant premium spikes.
What most natural disasters have that COVID-19 doesn’t is a predictable lifespan. A storm may last a few days to weeks, but there’s no end in sight for this pandemic. No one can say when things will return to some kind of normal.
Some possible good news
Not every insurer is predicting a rise in rates. At least one poll returned some data that doesn’t see rates rising in 2021. A survey by eHealth Inc. found that most of the providers consulted (85%) thought that COVID-19 wouldn’t have any impact on insurance rates and, if it did, the increase wouldn’t exceed 5%. All but one of the insurers who took part in the survey said they’d be waiving deductibles and other out-of-pocket testing costs, while over half said they also intended to waive treatment costs.
Let NICRIS find you the best insurance rates
There may be significant rate increases ahead on policies beyond healthcare—so it’s more important than ever to find the most cost-effective coverage today. Our team is dedicated to securing great options at the right price. Get in touch for a free review of home, auto, term life, and more.
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