Obamacare's many double-digit price hikes for next year
Insurers have asked for double-digit rate increases for nearly 1 out of every 3 Obamacare plans that will be sold on HealthCare.gov for 2016 coverage, according to a new analysis.
And in three states—Delaware, South Dakota and West Virginia—every plan sold on HealthCare.gov is asking for 10 percent or more hikes in the prices of their premiums for next year, AgileHealthInsurance.com said in its report.
(Source: AgileHealthInsurance.com analysis)
Existing Obamacare customers in six other states on that federally run marketplace, which serves two-thirds of the United States, could also be in for a rude awakening come November when open enrollment resumes.
In those other six states, a majority of plans are requesting double-digit hikes, ranging from Montana, where 86 percent of the plans have asked for such increases, down to North Dakota, where 67 percent of the plans are doing so.
"The natural reaction [for those customers] is: They're going to be surprised," said Sam Gibbs, executive director of AgileHealthInsurance.com.
"In some of these states, there's going to be a strong reaction to it," said Gibbs.
AgileHealthInsurance's analysis found that 7 percent of the Obamacare plans sold on HealthCare.gov are asking for rate hikes of at least 30 percent, while 14 percent of such plans are asking for increases of at least 20 percent.
To be sure, most plans are not asking for double-digit increases.
And because nearly 9 in 10 Obamacare exchange customers receive federal financial assistance to help pay their monthly premiums, even if customers re-enroll in a plan with double-digit percentage price hikes the hit to their own wallet will not seem as dramatic as if they were paying full price.
But the fact that many plans want to raise prices steeply for 2016 suggests to Gibbs that the Obamacare market is starting to more accurately reflect the actual cost of covering millions of new customers.
"You're starting to see kind of a normalization of the plans," he said.
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Gibbs said that in 2014, the first year of Obamacare enrollment, insurers faced pressure "to really keep the rates low initially," and many had an incentive to do so because they wanted to gain market share on the new exchanges.
When insurers proposed prices in mid-2014 for the current year, they had little data on how customers were using their new benefits, and how much that was costing the plans.
Now, insurers have much more comprehensive data about health-care utilization by their customers, and also know that some financial shock absorbers built into the Affordable Care Act designed to lower their potential losses will be expiring in 2017. Gibbs said. Those factors are leading some plans to boost rates more dramatically for 2016 than they had done for 2015.
Other research has borne that out. In June, an analysis by the price comparison site HealthPocket.com, a sister company to AgileHealthInsurance, found that in 45 states insurers were proposing average rate increases that were 12 percent higher for 2016.
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But federal officials who oversee Obamacare have repeatedly expressed caution about the value of such broad analysis of rates, and cite projections that most current enrollees are in health plans that will have rate increases in 2016 of less than 10 percent over this year.
They pointed to the fact that Obamacare customers can shop for better prices from other plans, and that many more than half of existing enrollees on HealthCare.gov actively shopped and chose another plan for 2015.
Officials also cited that the rates on two of the largest state-run Obamacare marketplaces, California and New York, will have relatively modest overall price hikes for their plans in 2016. The states cumulatively accounted for more than 15 percent of total U.S. Obamacare sign-ups.
California's insurance exchange has said the statewide average weighted rate increase for 2016 will be 4 percent. Plans on New York's exchange will rise by an average of more than 7 percent.
And federal officials also note that analyses by the Kaiser Family Foundation and the Avalere Health consultancy have found moderate price hikes for 2016 among a selection of Obamacare "silver" plans. Those plans are a closely watched category on Obamacare exchanges.
Silver plans, which cover 70 percent of their customers' health costs, are the most popular type of Obamacare plan in terms of enrollment, and are the only type that offers lower-income customers the ability to get financial assistance with their out-of-pocket health costs in addition to their monthly premiums.
And the second-lowest priced silver plan in each Obamacare market is used as a benchmark to calculate how much subsidy-eligible customers will get for their Obamacare plans.
Those subsidies, which are available to customers with low or moderate incomes, are often generous. The average subsidy, or tax credit, for eligible customers was $263 per month this year. And 80 percent of HealthCare.gov customers had access to a plan that would cost them less than $100 per month after their subsidy. Plans that cost less than $50 per month after factoring in the subsidy were available to 7 in 10 HealthCare.gov customers.
Aaron Albright, a spokesman for the federal Centers for Medicare and Medicaid Services, which oversees Obamacare, said the rate-review authority that many state insurance regulators have, as well as "greater transparency" required of insurers in justifying their proposed prices, "have helped lower proposed premiums in a number of states."
"The Affordable Care Act increases competition for consumers, allowing them to shop around for the best deal," Albright said. "Last year, more than half of re-enrolling customers on HealthCare.gov actively shopped and selected a new plan, something that wasn't possible for many consumers prior to the ACA due to the risk of being charged a higher premium or denied coverage entirely due to a pre-existing condition."
"Consumers will find a range of quality, affordable coverage options on the marketplace in 2016."