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80 Percent Of Health Plans Charge Higher Premiums Than They First Quote To Consumers

February 20, 2013

A new health plan analysis from HealthPocket, Inc., finds that 80 percent of U.S. health insurance plans raise premiums above the original quoted price for a portion of their applicants. On average, plans increased premiums for 18 percent of applicants, with plans in some states rarely increasing them and Pennsylvania plans raising premiums at a high of 32 percent of applicants. Premiums are typically the largest out-of-pocket health care costs for the average consumer and a major factor in health plan selection.

At the state level, eight out of the ten companies who increased premiums on applicants most frequently were for-profit Blue Cross Blue Shield companies. Anthem Health Plans in Virginia, part of Anthem Blue Cross Blue Shield, raised premiums for more than two thirds of applicants. The non-profit PacificSource Health Plans in Idaho was second highest within this ranking.

"Consumers cannot objectively compare health insurance premiums prior to application because insurers base their initial rates on the healthiest applicants, and for many these rates would not apply," said Kev Coleman , head of research & data at HealthPocket. "When insurers wait until an application is reviewed to reveal the true monthly premium, it is impossible for consumers to know what health insurance plan is the least expensive for their circumstances."

Beginning in 2014 under the Affordable Care Act, health status, sex, and pre-existing conditions will no longer increase premiums above the quoted price. Age and smoking status can still raise rates at this time, so older applicants will receive more expensive premiums than younger applicants, and smokers will pay more than non-smokers. However, unlike the current state of affairs, these premium increases can be reviewed prior to applying, making comparison shopping more effective in 2014.

States including Maine, Massachusetts, New Jersey, New York, Oregon, Vermont, and Washington had no activity in terms of increasing premiums after application. These states use a form of community-based premium rating practice that requires insurers to disregard health status in determining premiums to charge. However, those states with 'adjusted' community ratings are allowed to vary insurance based on some demographic criteria such as age or sex.

Results of this study were based on an analysis of 10,817 health insurance plans for individuals and families under the age of 65. This HealthPocket InfoStat is third in a series of InfoStats which use government health plan data to produce objective, meaningful, and clarifying information and guidance for consumers.