Here’s Why Your Health Insurance Premiums Are Going Up Again
Money + Markets

Here’s Why Your Health Insurance Premiums Are Going Up Again


While health insurers are busy setting their premium rates for 2017, economists and industry experts say that premium will generally increase next year, although the size of increases is uncertain.

Related: Get Ready for Huge Obamacare Premium Hikes in 2017

A new report from the American Academy of Actuaries outlines the trends that will impact health insurance premiums next year. “There are both upward and downward pressures on premiums for 2017, but for the individual and small group markets as a whole, the factors driving premium increases up dominate,” senior academy health fellow Cori Uccello said in a statement.

Here are a few of the biggest trends impacting your premium costs next year:

  • The cost of care is going up. While overall healthcare costs are not growing as quickly as they have historically, they’re still increasing, with prescription drug costs growing particularly fast. That trend will likely continue, as more high-cost specialty drugs come to market.

  • A federal program providing extra cash to marketplace insurers will end. Since 2014, the federal government has reimbursed health insurers who enroll higher-cost consumers in their plans through a reinsurance program, which has gradually reduced the amount of payments each year. In 2017, those payments will end entirely, which the Academy of Actuaries projects could push prices up 4 percent to 7 percent.

  • Insurers have a better understanding of the risk pool. Insurers set their premiums to reflect their experience with the actual risk of those enrolled in Obamacare. The Academy of Actuaries doesn’t project how this will impact rates next year, but notes that in previous years many insurers set premiums too low to cover their actual costs and will learn from that experience.