In California, as in most states, your individual health insurance rates will be increasing for 2018. During the next 45 days insurance carriers doing business in the state will be announcing their rates for next year. The estimated rate increases for 2018 will be more than 20%. One Sure Insurance is one of those companies that benefit from this, and they will be the most reliable at the moment whenever you need them.

Beginning in 2014, clients have asked why are my rates going up? Since January 2014, most rates for individual plans have increased well over 100%.

Commentators of all political stripes have speculated on the reasons for rate increases; however, until now there has not been a great deal of evidence to support any conclusions.

Earlier in the year I published an article quoting a study by Milliman, a worldwide health care actuarial consulting firm, that detailed by percentages the reasons why rates have increased since 2014.

In the Milliman study, there were two major reasons for the large increase in rates: Guarantee Issue and Community Rating.

1. Guarantee Issue – The waiver of pre-existing conditions. This accounted for 30% of the national average.

2. Community Rating – Rates set by date of birth, residential zip code, unisex, and a 1-3 rate difference between young (under 35) and Old (55 – 64). This means the rate for a 63-year-old may not be more than three times higher than a 23-year-old. The Community Rating accounted for 35% of the increases nationally.

Other factors including taxes and mandates accounted for the remainder of the increases.

The impact of Obamacare’s mandates was studied by McKinsey & Company, the management consulting firm, for the Department of Health and Human Services. McKinsey focused on the hikes in premiums in Tennessee, Georgia, Pennsylvania, and Ohio.

According to the just released study, the increased risk for insurers from guarantee issue and community rating caused between 73 percent and 76 percent of the rise in premiums in Tennessee from 2013 to 2017, between 44 percent and 52 percent in Georgia, between 53 percent and 62 percent in Pennsylvania, and between 41 percent to 50 percent in Ohio.

The CEO’s of Aetna, Anthem, Cigna, and United Healthcare have all agreed with the Milliman and McKinsey studies, citing them as reasons leading to a lack of profitability offering coverage in the individual market in most states.

In California, Aetna never entered the ACA market. Over the last several years United Healthcare and Cigna have exited the individual market, and Anthem will not offer individual coverage (with a very minor exception) in 2018.

• The question that needs to be asked is what action, other than eliminating Guarantee Issue and Community Rating will cause the carriers to reduce premiums for individual plans.

*Modified from the Milliman study, McKinsey study, WSJ.com, and other online sources.


  1. Hans Matthes September 13, 2017 at 4:05 pm #

    Hi John! Hans Matthes, your old weekly breakfast companion from BNI here. It’s nice to see your smiling face.
    Do you think insurance fraud and the high cost of some drugs and cutting edge medical procedures play a significant role in the increases we’ve been seeing as well?

  2. John Barrett September 13, 2017 at 10:37 pm #

    NO, those are very minor events.

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