Article by Dan Mangan | Featured on CNBC
“For people who are on the outside of subsidies, what had been a very expensive market has become even more expensive,” says a researcher at an insurance comparison site.
“Cheap” could cost you more for Obamacare next year.
People who buy the cheapest health plans on the biggest Obamacare exchange without getting financial assistance are facing the largest increases for premiums and out-of-pocket costs in 2016, new analyses show.
Average prices of the so-called bronze plans on the HealthCare.gov marketplace are rising 11 percent for nonsubsidized customers over 2015 prices. Average deductibles for individuals are increasing by the same percentage, to $5,731, according to a study by HealthPocket.com, an insurance comparison site.
Average premiums for the most popular types of plans, known as “silver plans,” are going up nearly as much — 10 percent — for HealthCare.gov customers who are unsubsidized, HealthPocket found.
Silver plan deductibles, however, are rising more modestly next year, by 6 percent for an individual, to $3,117.
The Avalere Health consultancy, in its own analysis, found that the average price of the lowest-cost bronze plan in HealthCare.gov states was rising by an average of 16 percent. Avalere said the average price of the lowest-cost silver plan was rising by 13 percent, compared to the 3.2 percent rise that was seen for 2015 plans.
Both HealthPocket and Avalere found wide variation in premium price changes across individual states. Some states saw far higher price hikes, while other states saw less dramatic spikes.
“While every market is different, and the reasons for rate changes vary, what’s important for consumers to understand is that about 8 out of 10 returning consumers will be able to buy a plan with premiums less than $100 a month after tax credits; and about 7 out of 10 will have a plan available for less than $75 a month.”
The analyses come as Obamacare’s third open enrollment season began Sunday, and several days after the U.S. Health and Human Services Department released its own study of plans for sale at HealthCare.gov, which services 38 states. HHS has repeatedly focused on the “affordability” of Obamacare plans, and is this season making a strong push to highlight the subsidies that are available to many people to reduce the cost of that coverage. Studies indicated that many of the remaining uninsured either don’t know about those subsidies, or are unsure of how they work.
HHS said that the average premium for closely watched types of silver plans was rising by 7.2 percent before subsidies were taken into account. The department also said 86 percent of current HealthCare.gov customers can find a plan with lower premiums, before subsidies, by shopping among available options.
“Consumers will continue to have affordable choices in 2016,” said Richard Frank, HHS’ assistant secretary for planning and evaluation. “While every market is different, and the reasons for rate changes vary, what’s important for consumers to understand is that about 8 out of 10 returning consumers will be able to buy a plan with premiums less than $100 a month after tax credits; and about 7 out of 10 will have a plan available for less than $75 a month.”
HHS challenges the value of analyses, such as HealthPocket’s, that don’t weigh average price changes based on enrollment levels.
But Kev Coleman, who heads research and data at HealthPocket, said the company’s analysis reveals “a tale of two cities” for health insurance customers that is worth telling.
“There are drastically different rates for the subsidized and the unsubsidized,” Coleman said.
He said his firm’s finding is “important” because it looked at the prices of all plans on HealthCare.gov and not just at the prices of plans that are used to help calculate financial assistance for Obamacare subsidies. “They can’t keep the narrative on single-digit” price increases, Coleman said.
“For people who are on the outside of subsidies, what had been a very expensive market has become even more expensive,” Coleman said.
The dueling views of the Obamacare landscape hinge on the availability, and prevalence, of federal tax credits that are available to people who buy health plans on government-run exchanges. The tax credits, or subsidies, are available to people who earn between one and four times the poverty level: between $11,770 and $47,080 for individuals, or between $24,250 and $97,000 for a family of four.
More than 8 out of every 10 customers on Obamacare exchanges qualify for subsidies, which reduce their monthly premium bill. And more than half of them also qualify for additional assistance that reduces how much they pay in deductibles.
Customers who are not subsidized must pay the full retail price on exchange-sold plans.
Coleman noted that the bronze plans, which cover about 60 percent of a person’s medical costs, have the highest enrollment by nonsubsidized customers, because those plans are least expensive.
However, he also pointed out that the average price of a bronze plan was about $232 per month for a 30-year-old person in 2015, and that it will rise to an average of more than $257 next year.
A 40-year-old bronze plan customer who paid an average of almost $261 per month in 2015 is now looking at an average price of nearly $290 per month.
And bronze plans have, as a rule, the highest deductibles, which people must personally pay before their plan covers their medical expenses. The 2016 average deductible for a family that does not receive assistance for out-of-pocket costs is $11,601, HealthPocket said.
“These are not inexpensive investments,” Coleman said.
He added that even subsidized people in silver plans, which cover about 70 percent of medical costs, can have deductibles of $3,000 or more.
HHS, when asked about HealthPocket’s analysis, noted that a report released last week by the department found just a 7.2 percent average increase in the price of so-called benchmark plans, the type of silver plans whose price is used to calculate the subsidies that most Obamacare customers receive.
“This rate increase is relatively modest compared to those in the individual market before the Affordable Care Act, when consumers in the individual market regularly experienced double-digit rate increases on average,” the HHS report last week said.
And Caroline Pearson, senior vice president of Avalere Health, said “while premiums have increased dramatically in every market, the vast majority of exchange enrollees receive premium subsidies that can protect them from these increased costs.”
“However, most consumers will need to return to the exchange to shop and may need to select a new plan to avoid higher premiums,” Pearson said.
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