Insurance cost

Earlier this week, insurance providers from across the country began submitting proposals to the government seeking higher premiums, with some companies looking to raise rates as much as 85 percent. The looming rate hikes are among the most recent disruption in the health insurance market caused by Obamacare regulations. Here are three reasons why your premiums may skyrocket next year.

1. An Arbitrary Rate-Review Process
Obamacare requires companies that are planning on raising insurance costs more than 10 percent to submit these plans to either a state or the federal government for review. While the Obama Administration is quick to point out that these increases are only proposals, the Administration does not actually have the authority to remove companies from the exchanges or to even negotiate rates. Although some state insurance commissioners can work with companies to set rates, twelve states are denied the power to dispute increased premiums and there are still six states that have been denied the power to conduct their own rate-review process.

2. Providers are forced to Charge More to Cover Claims
Obamacare regulations force insurance companies to offer the same rates to every applicant, regardless of their medical history and health background. Now that the law has been in place for several years, insurers are starting to see the adverse effects of selling plans with little to no information on the health of the buyer. Previously low rates were largely the result of insurers playing a guessing game about the health of customers. Now that there is data available to assess risk pools, insurers are seeking to hike up rates to cover the costs needed to pay claims.

3. People May Lose Subsidies
If the Supreme Court decides to interpret the Obamacare law as it is written in the King v. Burwell case, 85 percent of people using the exchanges will see the subsidies they rely on to pay for their insurance disappear. Come the end of the month, 8.8 million people could face monstrous health care premiums.  But on the bright side, if you lose your subsidy, you can keep your health insurance plan if you like it.