Soaring ACA Enrollment Numbers Might Help or Hurt Health Insurance Rates

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A new study shows soaring employer-sponsored health insurance enrollment over the last six months. This is encouraging news when it comes to public health concerns, but will these new enrollments increase health care costs, thereby driving up health insurance rates?

Uninsured Rate Down by 5 Percent

According to a recent survey from the nonprofit policy research firm RAND Corporation, “Changes in Health Insurance Enrollment Since 2013,” as of March 2014, 8.2 million individuals who did not have health insurance signed up for employer-sponsored plans after the Affordable Care Act roll-out in September 2013. Medicare enrollment was also up, adding 5.9 million to its coverage base.

Under state and federal marketplaces, another 3.9 million are covered. This has brought down the rate of the uninsured from 20.5 percent to 15.8 percent.

What Is Driving Enrollment?

The “Individual Mandate” portion of the Affordable Care Act levees fines for those who do not secure health insurance. This has led to more employer health insurance enrollments for a couple of reasons:

  • Employer-sponsored coverage is often cheaper for enrollees
  • Enrollment in an employer plan is typically a simpler process, without the technical difficulties that others using the health care exchanges experienced.

Costs to treat these newly-enrolled individuals could drive up health insurance rates next year, according to CNBC. Rising rates, however, are not entirely a result of the Affordable Care Act, as individuals rates have climbed 89 percent since 2003.

Regardless of what’s responsible for higher health insurance rates, “the law of large numbers” presents a silver lining. Insurers operate under this mathematical concept, which states that the greater the number of insured individuals, the more accurate loss predictions will be.

These larger numbers may allow health insurance companies to better predict costs and offer premiums that more accurately reflect the risk.

Photo credit: 401(K) 2013