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20% insurance premium increase
Old 12-26-2008, 02:43 PM   #1
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20% insurance premium increase

A year ago I got insurance for $500/quarter, this year its now
$600/quarter, a 20% increase!!! I'm still in my late forties, jeez,
at rate I'll be paying $3000/quarter by the time I'm 60. Looking
at ehealthinsurance.com the rates seem to be across the board.
This is the 1st year I've paid my own, is this normal, can I expect
20% increases as business as usual??
TJ
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Old 12-26-2008, 03:05 PM   #2
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Medical inflation is not 20% per year, but it has been the double digits generally.

What does your insurance carrier say about the reason for the increase?
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Old 12-26-2008, 04:31 PM   #3
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Just curious, what kind of policy and coverage are you getting for a total cost of $600/quarter? Sounds suspiciously cheap.......
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Old 12-26-2008, 04:37 PM   #4
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This came in a letter with the 2009 premiums:

"New gender-based rate structure. We have instituted rates for men and women to more carefully align the rate you pay with your gender and life stage."

This means that a man my age living in the city will pay $574 while a woman will pay $547 per month, 2008 rates for both sexes was $522. The rates always have varied by area, rural areas pay less.
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Old 12-26-2008, 07:35 PM   #5
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When I got my HSA policy from World Insurance I paid $274/mo. The next year it went up to $351/mo. This year, who knows? I'm coping by minimizing my visits to the Dr. I know this is not wise, according to the medical establishment. But the last time I went to the urgent care with an illness I ended up paying over $900 for tests and exam. Last time I went to the dermatologist to check out a weird bump on my skin, I got charged $600 for exam and labs.

Everyone I know who pays for their own health insurance is already rationing their own health care. This is the reality folks, for us now, and for everyone over 65 on Medicare sooner rather than later.
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Old 12-26-2008, 10:32 PM   #6
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Originally Posted by CuppaJoe View Post
This came in a letter with the 2009 premiums:

"New gender-based rate structure. We have instituted rates for men and women to more carefully align the rate you pay with your gender and life stage."

This means that a man my age living in the city will pay $574 while a woman will pay $547 per month, 2008 rates for both sexes was $522. The rates always have varied by area, rural areas pay less.
OK, so now you have your answer, unfortunately. Your insurance plan has converted to an age and gender band rating methodology. If you bought this through an insurance agent ask what the definition of your band is (i.e., men aged 35-55, etc.), and the next band definition.

It is likely that if you are in the middle of the band that your rates won't change dramatically -- unless -- medical inflation increases rapidly. Be prepared though for a bump in rates when you move from one band to another.

-- Rita
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Old 12-27-2008, 12:55 AM   #7
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That increase is a bit high, but not as high as you might think.... our company's first quote was a 19% increase from last year...

We fought and looked around and finally got it down to 13%, but we were told the 'average' was 15% increase...
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Old 12-27-2008, 08:06 AM   #8
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This means that a man my age living in the city will pay $574 while a woman will pay $547 per month, 2008 rates for both sexes was $522. The rates always have varied by area, rural areas pay less.
Very interesting, I would have guessed that the men's side would be cheaper. In nearly 40 years of marriage my wife has always had higher medical expenses and most of my friends say the same thing. Throw in child birth and I just would not have guessed it was cheaper for women.

We went to high deducible insurance in 2008 and we had to keep reminding ourselves how much we were saving on premiums when we were paying big bills early in the year and it worked out well the first year. All together we figure we saved between $4000-5000 this year. It was probably an average year for us for medical problems, we did hit the family max so they were paying 70% at about the 8 month point. The difference in my X-MegaCorp plans looked like they were purposely trying to heard the retirees into high deductible plans so we were suspicious. Our portion of the premium was almost $8000 cheaper with HD.

Jeb
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Old 12-27-2008, 10:16 AM   #9
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Most age-banded rating programs are for cohorts of five years each, so you can expect significant increases when you pass from one cohort to the next older group. In seven years of retirement, ours has increased 300% since 2001!

For health insurance, the rule is to expect less, and pay more.
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Old 12-27-2008, 12:02 PM   #10
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Look on the Health Ins. site for what they are currently quoting new customers with your ins. If less ask them for a review to that rate. I did it with BCBS and it saved me $
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Old 12-27-2008, 01:19 PM   #11
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Originally Posted by CuppaJoe View Post
This came in a letter with the 2009 premiums:

"New gender-based rate structure. We have instituted rates for men and women to more carefully align the rate you pay with your gender and life stage."
What do they charge for a woman trapped in a man's body? Or a man trapped in a woman's body?

I think this could get sticky.

Ha
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Old 12-27-2008, 10:06 PM   #12
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...I think this could get sticky.
Ha
I sincerely doubt that this policy will last very long. Age and gender are two of the big no-no areas for determining the cost of any sort of public services. I'm guessing medical care would be considered a public service, as in open to the general public, not funded by the public.
Line up the lawyers.
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Old 12-27-2008, 10:18 PM   #13
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Line up the lawyers.
Not so fast.

Age, gender, smoking history and even your zip code all play a role in the rates charged in the state high risk pool here in TX.
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Old 12-27-2008, 10:27 PM   #14
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Not so fast.

Age, gender, smoking history and even your zip code all play a role in the rates charged in the state high risk pool here in TX.
Ditto for smoking (personal choice) and zip code (cost based) in most states. What I was meaning to convey is someone is gonna pull either one of those two cards (gender or age) out of the deck, cry discrimination, hire an attorney, and bring a lawsuit. And probably win.
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Old 12-28-2008, 09:14 AM   #15
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I sincerely doubt that this policy will last very long. Age and gender are two of the big no-no areas for determining the cost...
It has gone on for a long time in the car insurance business. Has that ever been challenged?

-ERD50
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Old 12-28-2008, 09:35 AM   #16
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Age, gender and marital status are legitimate and legal factors for setting insurance rates when it can be actuarially shown that they have different costs to insure. For example, with respect to health insurance women are more expensive to insure during child-bearing years, and men become more expensive after child-bearing years. Because the evidence clearly supports this, it is legal to set different rates by age and gender.
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Old 12-28-2008, 11:29 AM   #17
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Unfair is a word with great weight in our culture. People want insurance rates to be "fair", at least when it is in their interest. Fairness usually means some connection between prospective future losses and rates.

However, even when this connection is very strong, there are some who feel that the result is unfair because the rate turns out to be more than some can pay.

There is no doubt, for example, that people who live in congested metro areas where costs are high, pay more to go to the doctor, pay more to get their cars fixed, pay more for home repairs, see more crashes, see more crime, and as a result see higher insurance rates.

This is true in most places, except CA, where the voters enacted a law(Prop 103) that forced rural drivers to subsidize drivers in the cities.

Every insurance mechanism will involve some subsidies. As a society, we can have any insurance formula that we want. Certainly, forcing everyone to buy health insurance will transfer costs to the healthy young from the less-healthy aged. Given the lack of retirement funding for most of the baby-boomers, and everyone else, how else will boomers (and all the un-insured) get healthcare?
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Old 12-28-2008, 02:28 PM   #18
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Ditto for smoking (personal choice) and zip code (cost based) in most states. What I was meaning to convey is someone is gonna pull either one of those two cards (gender or age) out of the deck, cry discrimination, hire an attorney, and bring a lawsuit. And probably win.
Freebird,

These three determinants are in the state's insurance laws. It will take legislatures to remove them as rating mechanisms. If someone wants to cry 'discrimination' they will need to sue the state.

Rating mechanisms are not barriers to access to health care.

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Old 12-28-2008, 06:22 PM   #19
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Originally Posted by teejayevans View Post
A year ago I got insurance for $500/quarter, this year its now
$600/quarter, a 20% increase!!! I'm still in my late forties, jeez,
at rate I'll be paying $3000/quarter by the time I'm 60. Looking
at ehealthinsurance.com the rates seem to be across the board.
This is the 1st year I've paid my own, is this normal, can I expect
20% increases as business as usual??
TJ
Sorry to hear about the increase. It seems like a lot.

Would it be safe to say there are at least two components of a rate increase -- 1) normal inflation, and 2) the fact that the insured is a year older than he/she was the previous year?

Well, just thought of another one. The medical industry seems to be constantly figuring out ways to better treat us. This usuallly results, to some degree, in using treatments that did not exist previously, adding to the year over year cost.

When we refer to medical inflation, are we comparing the year over year cost of care for the exactly the same treatment of the exactly the same conditions for a person of the same age and health? Every insured gets one year older every year until they die. The "aging factor" has to be accounted for somewhere in these increases. I'm not sure it is fair to call it inflation. You are older this year than last, and age is an important component of the rate.

Not trying to defend the insurance industry, just trying to understand some of it.
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Old 12-28-2008, 07:25 PM   #20
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Medical Inflation is not just about aging insureds, but about the cost of health care. Generally it includes:

the cost of prescription drugs (for some reason the cost isn't going down)
new technology and treatments (for some reason the cost isn't going down)
aging population
increases in uncompensated care

As you can see from the list, insurance carriers don't contribute to the cost of medical inflation -- they do pass it on as they are the ones who finance the costs (reimburse providers of services contracted on behalf of their insureds).

Insurance is about reimbursement - not about access to care. Certainly insurance carriers try to control the cost of services when they negotiate the fee schedule with the providers and hospitals.

To give a better understanding of the cost of care, the following from the BLS about the monthly CPI shows increases in the cost of medical care when other segments have been reducing their costs month over month. This is from November 2008:
Consumer Price Index Summary

"The index for medical care rose 0.2 percent in November, the same increase as in October, and was 2.7 percent higher than in November 2007. The medical care commodities index rose 0.6 percent in November following a 0.2 percent increase in October as the index for prescription drugs rose 0.6 percent in November after increasing 0.3 percent in each of the two prior months. The index for medical care services rose 0.1 percent in November after rising 0.2 percent in October. Within medical care services, the physicians' services index rose 0.3 percent after increasing 0.1 percent in October and the index for hospital and related services was virtually unchanged in November after advancing 0.4 percent in October. "
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