A Quick Guide to Rising Obamacare Rates

By REED ABELSON and MARGOT SANGER-KATZ OCT. 25, 2016

The Obama administration released the prices for many Obamacare health plans on Monday, and they showed big increases in many parts of the country. Obamacare customers will begin shopping for new plans next week, just a few days before the presidential election.

The news fanned political interest in the health law — both presidential campaigns were talking about the topic on Tuesday — and whether its structure of private insurance markets is sustainable. The health law will almost certainly stay on the minds of politicians in the next administration: Both Hillary Clinton and Donald J. Trump have proposed substantial changes to it.

If you’re just catching up now, here’s our quick guide to what’s happening and who will be affected.

Obamacare rates are going way up. The latest estimate from the federal government is that the average midlevel Obamacare plan, the most popular choice, will cost about 22 percent more in 2017 than it did in 2016. This is based on data from 39 states where people sign up through the HealthCare.gov website and some preliminary data from four other states and the District of Columbia.

There is big variation nationwide. Customers in Phoenix are looking at a premium increase of 145 percent, while customers in Providence, R.I., are looking at a 14 percent decrease, according to a Kaiser Family Foundation analysis.

This is not a huge surprise. There have been signs for months that insurance rates for people who buy individual policies would rise more next year than they have in previous years. There are a number of reasons, including the fact that some of the programs meant to keep rates lower are ending at the end of this year.

Many insurers also mispriced their plans in the early years of the law and have either left the market or have had to raise their prices sharply to cover the cost of providing coverage. The insurers say they need higher rates to pay for the expensive medical care that so many people are receiving under the law.

We didn’t know the exact amount of the increases until now. But Charles Gaba, a blogger who has scrutinized state insurer filings, has been forecasting increases in this range for some time.

The 2017 premiums are actually a pretty good match for what the Congressional Budget Office forecast back before the Affordable Care Act passed in 2009. The big question now is whether this is a one-time jump in the rates — or the start of ugly increases from now on.

These increases really matter only for those who buy their own insurance. Most people are unaffected by the rate increases because they get their insurance through an employer or are covered through government programs like Medicare, Medicaid or the Department of Veterans Affairs.

Only a small fraction of Americans who have insurance buy individual policies. There are about 10 million people in the Obamacare markets and around an additional seven million who buy health plans outside the marketplace, according to Obama administration estimates. The published rate increases apply only to people who shop in the markets, but premiums are expected to go up sharply for the other plans as well.

If you get a subsidy, and you’re willing to switch plans, you won’t have to pay these big increases. More than 80 percent of Obamacare customers get subsidies that help them pay the cost of their premiums. Those people do not pay the full cost of insurance out of their pockets, and they will not feel the full brunt of these increases, as long as there is a less expensive plan available in their market and they are willing to switch.


People who don’t get subsidies will be the ones hardest hit by the increases.

Customers may have to switch plans to save money, and switching health plans can be a big deal. Obamacare plans tend to cover a narrow group of doctors and hospitals, so people who change their plans may also have to find new health care providers. For healthy people, that may not matter, and they may just want to find the cheapest policy. But patients with complex health needs may have a hard time abandoning a hospital or doctor and starting over with new ones.

That means that the sickest patients are most likely to be squeezed. They’ll either have to suffer the inconvenience of switching all their doctors and records around, or they’ll have to stomach the biggest increases.

Despite the burdens for these people, annual switching is a feature, not a bug, of Obamacare. The law relies on market competition to keep premiums as low as possible. If customers aren’t willing to change into the cheapest plans, the insurance companies won’t have any incentive to compete on price.

If you get insurance through work, you don’t have to worry too much about this news. The health law is much bigger than just the Obamacare exchanges, and many of the new rules offer protections against having coverage that is too skimpy. Your health plan must cover basic services, like drugs and hospitalization; basic preventive services provided by your doctor, like a checkup, a flu shot or a mammogram, can be free.

But while you may feel as if you’re paying more for your medical care, premiums for employer-based insurance have been increasing at historically low rates. Premiums for the average single person in the employer market are the same this year as they were in 2015, according to a large survey of employers from the Kaiser Family Foundation; prices for most family plans are rising by 3 percent.

What has probably changed is the size of your deductible, which has been going up steadily. Employers have been shifting costs to their workers, a trend that began long before Obamacare went into effect.

Of course, federal tax dollars pay for the subsidies for low-income people who buy insurance in Obamacare markets — about $32 billion this year, according to the Congressional Budget Office. If premiums go up by more than 20 percent every year, that will put pressure on the federal budget.

People buying their own insurance should shop around for the best deal. Average numbers aren’t that useful to a person buying insurance in a particular place. If you already have Obamacare insurance or are buying it for the first time, you need to go to your state exchange website and look at the choices available to you. If you are eligible for a subsidy and willing to switch plans, your costs might actually go down.

If you’re not eligible for a subsidy and live in one of the places with big price spikes, finding affordable coverage may be more of a struggle. Wherever you are, if you’re on a budget, it pays to look at all the options and see whether there’s a plan that’s similar to yours and has a better price.

Even if you don’t want to shop, you may have to. Several large insurance carriers, like UnitedHealth Group and Aetna, have decided to exit many of the places where they had been offering policies.

Some markets are not functioning well. Because what is happening varies around the country, it’s hard to generalize about whether Obamacare is “working” everywhere. But the combination of insurer exits and sharp price increases is a sign that the markets are in trouble in at least a few parts of the country. There are many places where customers have only one insurer offering plans and where prices have risen sharply. That’s a bad sign for a system built around choice and market competition.

Fixing what ails the markets is complicated. There are a number of policy proposals out there to help stabilize the Obamacare marketplaces. But experts have not coalesced around one simple fix that by itself can solve the problems. Some of the suggested changes involve complex regulatory changes, but most are legislative. The ideas include increasing penalties for remaining uninsured so that more healthy people will join the insurance pool, and extending safety-net payments for insurers who end up with very sick, very expensive patients.

As for the candidates, Mrs. Clinton has said that she’d like to introduce the public option, a government-run insurer, in markets with limited competition. She has also discussed an option for middle-aged Americans to buy Medicare instead of marketplace coverage if they want it. She wants to expand subsidies so that more middle-income people will have help buying insurance.

Mr. Trump says he wants to repeal the Affordable Care Act, which would mean eliminating the new markets altogether. Rather than adjusting the markets, he proposes starting over with a new system for buying and selling health insurance.

http://www.nytimes.com/2016/10/26/upshot/rising-obamacare-rates-what-you-need-to-know.html?contentCollection=smarter-living&hp&action=click&pgtype=Homepage&clickSource=story-heading&module=second-column-region&region=top-news&WT.nav=top-news

Last edited by Goose (10/27/2016 8:48 am)