Health insurance rates and premiums are closely related, but they are not the same thing. Insurance companies establish rates based largely on the anticipated cost of providing health care, including hospital services, doctor visits, prescription medications and other covered medical expenses. Those rates are then used to help determine the premiums individuals and families pay for coverage.
In Washington State, health insurers generally submit proposed rate changes to the Office of the Insurance Commissioner for review. State insurance regulators examine the information supporting the requested rates, including claims experience, enrollment, administrative expenses, projected medical costs, prescription drug expenses and other financial factors. Insurers must provide sufficient justification for requested increases.
The premium an individual ultimately pays can also be affected by factors such as age, family size, geographic location and the type of health plan selected. A person's current health or medical history cannot be used to determine how much they pay for an individual health insurance policy.
Consumers may experience premium increases even when they personally have not filed significant insurance claims. Health insurance spreads costs across groups of policyholders, so increases in hospital costs, medical services, prescription drugs and overall health care utilization can affect premiums throughout an insurance pool.
Washington's insurance rate review process is intended to provide oversight and transparency while ensuring that insurers charge rates sufficient to cover expected claims and other legitimate expenses.