You may have seen the news over the past few weeks that UnitedHealthcare, the largest health insurer in the U.S., announced that it will no longer offer insurance on the Marketplace (Obamacare). This news coupled with the higher claims rates for all the insurers (people using their insurance more than expected) means that all of our health insurance rates will likely be going up double digit percents again this year. Initial rates from some carriers show 20-30% increases in certain states.
Anyone who pays for their own health insurance will feel the most impact while those in employer-based plans will have to see how much of the increase their companies are willing to absorb. One way or another we all pay for these increases whether it be through increased premiums or an increase in the prices for goods and services for the companies that absorb some of the cost.
One of the only ways around this is to opt for a plan with higher deductibles and co-pays. This may be fine if you are healthy and do not have any chronic conditions like diabetes. However, if you have to be hospitalized, or need tests done, it may cost you quite a bit. If your employer has a high deductible health plan, you may want to consider putting money into an HSA (Health Savings Account) where you can pay for some of the deductibles and co-pays using pre-tax money.
Those on Medicare will be not be immune to the increases in rates. We are seeing rate increases of 9%+ for a number of Medicare supplement plans across the country. These increases are harder to absorb for folks on fixed incomes. They have to cut spending in other places. When people reduce their spending they tend to eat out less, take shorter or no vacation, hold off on large purchases, etc.
This will be a big headwind for the economy heading into 2017.
The views expressed are not necessarily those of Cambridge and should not be construed as an offer to buy or sell any security.