Early look at 2017 Obamacare plan prices

Health Insurance

June 28, 2016

Americans who take part in Obamacare may see higher rates in 2017. Several sources are reporting double-digit premium hikes, leading to questions of how these substantial price increases will impact consumers and the health care system as a whole. In an interview with Morning Consult, Marilyn Tavenner, president and CEO of America’s Health Insurance Plans, said that several factors were responsible for the projected price increases. Among them are rising health care costs and market shifts.

In 2016, premiums jumped 11 percent on silver-level plans. Some states saw a 76 percent increase in premiums, but the average increase for a young man on the marketplace was just 8 percent for silver-level plans. Market experts can’t always predict accurate numbers due to varying factors, such as individual state and market rates, but many agree that 2017 will see substantial price hikes to account for changes in the health care landscape.

Premium rates are expected to rise due to overall market conditions and rising health care costs. In 2014, health care spending grew by 5.3 percent to $3 trillion, a record-setting figure. Prescription drug companies have also been raising prices on certain drugs, specifically new specialty drugs and brand name prescriptions. Some branded drugs have seen price hikes of 9 to 10 percent since December 2015.

Adding to the issues of rising costs is the fact that insurers have been unable to accurately predict the cost of covering a larger, older and sicker population of enrollees. Under the Affordable Care Act, anyone who signs up for coverage is guaranteed a plan regardless of pre-existing conditions or health status at the time. To offset the cost of providing health care for an aging enrollment pool, insurers need young, healthy people to sign up for coverage.

More young adults enrolled in 2016 than they had in previous years, but the numbers aren’t enough to make up the deficit. According to a study conducted by the Blue Cross Blue Shield Association over the first nine months of 2015, Obamacare enrollees cost about $559 per month in claims compared to $457 per month for those enrolled in employer-based plans. UnitedHealth Group, the largest insurance provider in America and a big presence on state and federal exchanges, has already announced that it plans to cut ties with most of the states it services for next year. Some fear that other large companies will follow suit.

Despite predictions that premium rates will rise again in 2017, officials with the Department of Health and Human Services (HHS) are optimistic. Previous predictions about shocking price hikes turned out to be overly inflated. In an HHS study on premium rates for 2015, the department found that the average consumer only saw a 4 percent increase in premium rates for subsidized plans. Those who qualified for subsidies paid an average of $106 a month in premiums vs. $102 a month the previous year.

Premium rates still need to be reviewed, approved and finalized before hitting the marketplaces for 2017. Even if rates skyrocket into a double-digit increase, consumers may not see a significant upswing in their monthly costs. With ACA subsidies to counteract price hikes, many enrollees could see a normal increase.