Will Premiums Skyrocket in 2015?

Fears of skyrocketing premiums in 2015 may be unfounded as marketplace enrollment continues to grow and insurance companies vie to remain competitive. While there may be reasons to believe that premiums will increase substantially, particularly in less competitive markets, there are even stronger reasons to believe that premium increases will be moderate, and in line with underlying cost growth.

The dominant force behind the surprisingly low premiums in 2014 remains intact—the strong incentives for markets to be highly competitive, which forces insurers to set premiums aggressively to attain or retain market share. These incentives should be even stronger in 2015 with increased enrollment and a more stable risk pool.

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