A common question we hear from our clients is “why are insurance rates going up.” Back in October 2013, we blogged about this burning question; here’s a link to our post to as a refresher.

Three months later, The New York Times reports, people signing up through the Affordable Care Act’s marketplaces tend to be older, officials said Monday, a demographic mix that could cause premiums to rise in the future if the pattern persists. You can read the entire article here.

As a reminder, the cost of health care (and the underlying insurance rates) increase due to four primary reasons:

• Better technology (CAT scan vs. X-ray)
• Aging population (life expectancy in 1900 was 40; today we’re more than double that)
• Defensive medicine (Google any ailment and a doctor has to test and treat you for it)
• Increased use of pharmaceuticals (doesn’t there seem to be a pill for everything?)
• Couple these four factors with a poorer risk pool and health insurance rates are going to rise at a faster rate.

Unfortunately, we will not see insurance rates going down anytime soon in the group marketplace and the anomaly of rates dropping in the individual market was due to new and more plans being offered in New York. However, to balance out the costs, there needs to be a variety of healthy people of all ages enrolling in the Exchange.

Jeffrey R. Ungvary

President