Health Insurance Rates to Come Down in 2011?

An apple a day keeps the doctor awayThe Wall Street Journal is reporting this week that insurance companies are seeing a trend this year that they haven’t seen before.  At least, not in quite some time.  For the first time in a long time, insured Americans are using fewer medical services.  And it could mean lower health insurance rates in 2011.

WellPoint Inc’s CEO is quoted as saying, “Utilization is lower than we expected, and it’s unusual.”  And he’s not the only one seeing the change.  Aetna and UnitedHealthcare reported lower utilization in the first and second quarters of this year during their earnings conference calls.  Additionally, CVS Caremark, the drugstore giant, says they are seeing fewer prescriptions being filled.  Quest Diagnostics, a laboratory testing company, has had descreasing patient volumes over the first part of 2010 as well. 

Fewer people are going to the doctor this year

What is causing this decline in utilization?  Obviously, the economy is playing a large part in it.  As people look to save money, they put off going to the doctor or having elective surgery or, perhaps, even forgoing their medication.  Another reason we are seeing a decrease in utilization is that many people who were on COBRA due to the government subsidy are now coming off of it.  The subsidy is no longer being offered to the newly unemployed.  Another reason could be the increase in High Deductible Health Plans, such as HSA’s.  Because more people are responsible for the up front costs of medical services, they could be putting it off.

It will be interesting to see if these trends reverse in the second half of the year.  Perhaps as those folks with high deductibles hit their limits, there will be a jump in utilization.  Maybe the economy improves, more people get jobs and start to take advantage of their health benefits again.  BUT…if the trend of lower utilization continues…we could be looking at a flat health insurance market in 2011.  Maybe a less aggressive health consumer is here to stay. Maybe we might even see insurance rate decreases. 

Hard to believe?  Aetna’s CFO is quoted as saying, “If utilization stays down, it will have a favorable impact on rates.”  So stay tuned and remember, an apple a day…

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One Response to Health Insurance Rates to Come Down in 2011?

  1. Pingback: Health Insurance Rate Expectations for 2011 « Business Risk Management

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