By ALEX JACKS
Insurance proves to be one of those expenses in life that no one wants to pay for, but everyone knows they need. From car insurance to health insurance, every aspect of Mississippians’ lives can be affected by it. Due to the influence insurance plays in all walks of life, the insurance industry constantly faces challenges.
According to the Mississippi Insurance Department, there are a number of challenges facing the insurance industry in Mississippi — one of the biggest being the education of consumers.
“The education of consumers is a constant challenge,” a statement from the Mississippi Insurance Department said. “The department depends on agents to help with consumer education. We also provide a large variety of information to consumers through department outreach efforts.”
Mississippi Commissioner of Insurance Mike Chaney encourages all persons purchasing insurance to be informed through education.
“Changes in the insurance industry are happening daily, and anyone considering purchasing insurance in Mississippi needs as much information as possible in order to make an informed decision before they purchase a policy,” Chaney said. “Keeping the consumer informed is one of the biggest challenges facing insurance professionals in the state. The Mississippi Insurance Department works alongside agents in the state to provide consumers with the most current information available.”
Since the Mississippi Insurance Department regulates all insurance types in Mississippi, it faces difficulties with property and casualty insurance and healthcare insurance.
One of the biggest issues revolving around property and casualty insurance is the uncertainty surrounding the reauthorization of the National Flood Insurance Program and the reform of the program to allow for more competition from the private market, according to the Mississippi Insurance Department.
“We are also closely watching the factors driving the cost of auto insurance —frequency from distracted driving, texting and driving, and the rising cost of auto collision repairs,” a statement from the department said. “Fire safety and fire safety education will always remain high priorities for us in helping to control fire deaths in the state.”
As far as automobile insurance goes, the department said the factor that influences the increasing rates the most is accident frequency caused by distracted driving, such as using cell phones. Deteriorating road conditions also tend to lead to more traffic congestion and accidents, the department said.
When discussing the health-care side of the industry, the department said rising health-care costs, the drastic increase in the number of people addicted to opioids and Medicaid coverage are great concerns.
“Approximately 760,000 Mississippians depend on Medicaid or the Children’s Health Insurance Program for health care,” according to the department. “If approved by the House, the American Health Care Act will move the entire program to a block grant program where the state would receive a fixed amount instead of a certain percentage of the costs. It aims to cut $839 billion from Medicaid budgets nationally.”
In addition to the federal insurance programs already being cut, the department is concerned with how to continue cost sharing reduction payments.
“While these payments are critical to subsidizing out-of-pocket costs for individuals up to 250 percent of the federal poverty level, Congress has offered mixed messages as to whether these payments will be continued,” a statement from the department said. “Without cost sharing reduction payments, it is expected that insurers will continue to leave the individual marketplace and individuals could see double digit increases in their premiums.”
If passed, the American Health Care Act would repeal cost sharing reductions and payments to insurers for cost sharing reductions beginning on Jan. 1, 2020, the department said.
“Until then, the Administration and Congress will need to decide a path forward to ensure a stable marketplace,” according to the department. “There will be a great impact on plan participation if cost sharing reductions funding is lost. If federal reimbursements cease, insurers will have four potential options: 1) Absorb the cost; 2) request a midyear premium rate increase; 3) exit the Patient Protection and Affordable Care Act marketplace; or 4) exit the entire individual market and no longer sell plans to individuals on or off the marketplace.”
Despite the stalemate in Washington, the department has addressed several issues — like the Centers for Medicaid and Medicare Services (CMS) policy — which have helped stabilize the health insurance market in Mississippi.
“The Mississippi Insurance Department was instrumental in obtaining approval from The Centers for Medicaid and Medicare Services to extend transitional policy relief until December 31, 2018,” a statement from the Mississippi Insurance Department said. “Without this extension, policyholders with non-grandfathered coverage in the individual and small group market would have seen devastating rate increases on December 31, 2017.”
The CMS also recently issued a wavier to the Mississippi Insurance Department to ensure that children 14-years-old and under would not see large rate increases for health insurance coverage.
“The Mississippi Insurance Department requested and received approval from The Centers for Medicaid and Medicare Services to use the current age band rules, which the state has been using since 2014,” according to the Mississippi Insurance Department. “Without the waiver, beginning January 1, 2018, many younger enrollees would have seen significant rate increases under the Patient Protection and Affordable Care Act.”
Another aspect of concern the insurance industry faces revolves around its younger consumers. While handling insurance claims and questions digitally has become beneficial to all consumers, there are several drawbacks to its efficiency.
“A younger generation certainly pushes the industry to become more creative with how they deliver and service their products,” the department said. “The younger generation also doesn’t rely on the agent as much for their point of sale. Doing so can sometimes result in consumers being misguided with their protection needs and how a policy works. Younger consumers are quickly discovering there are aspects of coverage that they need to discuss with an agent.”
When agents do not have the opportunity to inform young consumers, it can have a negative effect on the insurance industry.
“Another issue of concern involving young consumers is that some forgo purchasing health insurance coverage because paying the Patient Protection and Affordable Care Act penalty may be more economical for them,” a statement from the department said.
“This has a negative effect on the insurance industry by affecting the risk pool balance. The risk pool is required by the Patient Protection and Affordable Care Act when developing premiums. If there are not enough young and healthy individuals to help balance the risk pool then this is what causes the increase in healthcare cost for older individuals.”