Rates Up 22 Percent For Obamacare Plans, But Subsidies Rise, Too

Oct 24, 2016
Originally published on October 25, 2016 9:30 am

The cost of health insurance under the Affordable Care Act is expected to rise an average of 22 percent in 2017, according to information released by the Obama administration Monday afternoon.

Still, federal subsidies will also rise, meaning that few people are likely to have to pay the full cost after the rate increases to get insurance coverage.

"We think they will ultimately be surprised by the affordability of the premiums, because the tax credits track with the increases in premiums," said Kevin Griffis, assistant secretary for public affairs at the Department of Health and Human Services.

The 22 percent rise reflects the average for all insurance marketplaces, both federal and state-based exchanges for which data are available. For insurance purchased through the federal HealthCare.gov exchange the rise will average 25 percent.

During a media briefing Monday, Griffis said the 2017 rates are roughly at the level the Congressional Budget Office forecast when the law was proposed. "The initial marketplace rates came in below costs," he said. "Many companies set prices that turned out to be too low."

Enrollment opens Nov. 1. For coverage effective Jan. 1, people need to pick a plan by Dec. 15. With a few exceptions, the last day to sign up for Obamacare is Jan. 31, 2017. Plans are available on HealthCare.gov and state-run exchanges.

While the average premiums on the benchmark health plans are increasing, the government says more than 70 percent of people buying insurance on the marketplaces created by the law could get a health plan for less than $75 a month for 2017. To get the best deal, people would have to pick a low-cost plan with limited benefits and take advantage of all the subsidies available.

People who already have coverage through the exchanges can often save money by switching plans, the administration said. More than three-quarters of people could save money by switching to the lowest-cost plan within the level of coverage, such as bronze or silver, that they've previously selected.

The Obamacare insurance exchanges are under strain after three major insurers pulled back from offering coverage in markets across the U.S. The administration says about 1 in 5 people buying insurance through the marketplaces will have only one company offering coverage.

It's in places like that where consumers will feel the most pain. "Where it really matters is where a big insurance company has exited and where that's going to leave just one company remaining," said Cynthia Cox, associate director of health reform and private insurance at the Kaiser Family Foundation. "For those people who live in that area, many people may have to switch plans. And they won't have much choice if they want to receive financial assistance and purchase through the exchanges."

Copyright 2018 NPR. To see more, visit http://www.npr.org/.


Rates for health insurance purchased through an Obamacare exchange are going up next year. The Department of Health and Human Services said today that the average rate would rise 22 percent on healthcare.gov and state-based insurance marketplaces. But the administration took pains to stress that the tax credits most people receive will rise, too, and offset the premium increases. For more on this, we're joined by NPR health policy correspondent Alison Kodjak. Alison, hi.


SIEGEL: What information exactly did the Obama administration put out today?

KODJAK: Well, open enrollment for the Affordable Care Act insurance starts next week on November 1. So what they opened today was what's called window shopping. People can go online and compare health plans, see the benefits and also see the costs. They can compare prices. So all the details of what plans are offered in different states is out there for people to look at today.

SIEGEL: And the prices are going up. Is this bad news for the Affordable Care Act and the people who use it?

KODJAK: Well, it's certainly not good news for anybody. But how bad it is will depend on where you live and how much money you make. The increases are very varied from state to state. Some are seeing really huge increases. Like in Arizona, the benchmark rate is more than doubling. That's the rate for what they call a silver plan. But in some other states like in Ohio, it's only increasing by about 2 percent.

If you qualify for subsidies, which means you're lower income, those subsidies will also go up. So you might not see a huge increase in what you have to pay. If you're a higher income and are buying through this insurance, you're going to see the full rate increase.

SIEGEL: There have been a number of stories over the past several months about companies quitting Obamacare. Is that showing up now that people can start comparing plans?

KODJAK: Yeah, it is showing up quite a bit. There are three major insurers - United Health Care, Aetna and Humana - who pulled back from offering insurance pretty dramatically last year, and that left some places where people have really very few choices in insurance.

At least five states, including, like, Alabama, Oklahoma, have only one company offering insurance throughout this whole state, and there are a lot of other individual counties that only have one insurance company. Sometimes they're offering multiple plans so people can choose between two Aetna plans or two Blue Cross plans, but there's not as much competition out there as I think the administration would like to be seeing.

SIEGEL: Opponents of the Affordable Care Act have attacked the program in part for rising premiums. It's obviously a very divisive political issue. What do the presidential candidates say they'll do about it?

KODJAK: Well, you know, it's coming down pretty much on party lines like it has over the many years that Obamacare has been around. Donald Trump, like most Republicans, has said he's going to fully repeal the Affordable Care Act. At this point it's been in place for several years, and a lot of people have insurance through it. So if he does that, 20 million people who have insurance now will have to find something else. That includes people on Medicaid. He hasn't really put out a detailed plan on what he would do to replace it. He's mentioned health savings accounts, which is a way for people to save money, tax-free, to pay for health care costs.

Hillary Clinton - completely opposite. She wants to take what's there and build on Obamacare, make it more robust and strong. She talks about increasing the subsidies. She talks about taking actions to rein in costs. She's also proposing allowing people to buy into Medicare earlier than they can now. Now it's 65. They - she wants a lot of people starting at age 55 to do so. And she's also brought up what was very controversial - the public option, which is allowing the government to offer health care in places where there isn't a lot of competition.

SIEGEL: NPR's Alison Kodjak, thanks. Transcript provided by NPR, Copyright NPR.