3 truths about the 2017 ACA marketplace
HHS confirmed an average 25% increase for next year's benchmark ACA plan premiums.
It was Christmas in October this Monday for health insurance wonks. Earlier in the day, HHS opened the blinds for individuals to preview and window-shop premium prices and plans on the ACA marketplace to prep for the upcoming enrollment period. Later in the day, the agency released a report showcasing just how much ACA premiums are increasing in 2017.
It's not great but it's complicated
On one hand, the individual marketplace is small compared to the small and large-employer coverage business and the uninsured rate in the U.S. thanks to the ACA is at a record low. However, on the other, the upcoming enrollment period performance is going to heavily scrutinized in the wake of multiple carrier exits and what the HHS confirmed on Monday: ACA marketplace plan premiums are increasing.
HHS stated the average increase in 2017 benchmark premiums for states using HealthCare.gov is 25% (unsubsidized), compared to a 7.5% last year and a 2% increase in 2015.
While important to note, ACA premium increases weren't unexpected. Charles Gaba of ACASignups.net estimated as such. In addition, it's widely known that insurers priced premiums pretty low for the first year of enrollment leading to a charge of sicker-than-previously-thought patients to actually use their newly-found coverage. Because of this, insurers have been losing money on exchanges and have been trying to make up for it since.
As Vox's Sarah Kliff pointed out on Twitter, "Obamacare premiums are actually right around where CBO thought they would be now." In 2009, CBO projected the national average premium for the second-lowest cost ACA silver plan in 2017 to be around $5,538. "For comparison, ASPE estimates that the weighted average premium for single coverage under the second-lowest cost silver plan will be $5,586 in the HealthCare.gov states in 2017," HHS' report stated.
Despite that, the report does supply a "headline hurdle" to the federal government's scaled up efforts to reach out to and enroll young invincibles who may hear the perceived doom and gloom of premium increases and decide to pay the health insurance penalty instead of receiving coverage.
HHS has projected a total of 13.8 million individuals will sign up for health plans through the ACA marketplaces by the end of open enrollment for 2017, an increase of 1.1 million people purchasing coverage on top of the 12.7 million existing customers, which would be about the same percentage of growth that was seen for 2016. The agency is gunning for those young invincibles to help stabilize the marketplace.
Where the HHS report really gets interesting is it confirmed those who will purchase insurance through the exchange next year will have varied experiences. Here's why:
There will be many many subsidies...but some will pay full price
HHS added 85% of current marketplace consumers receive tax credits and estimate 2.5 million individuals who receive coverage off the marketplace could be eligible for such subsidies in 2017 for marketplace coverage.
HHS' report shows 72% of marketplace consumers in states using HealthCare.gov will be able to find plans with a premium of less than $75 per month and 77% will be able to find plans with premiums below $100, taking into account financial assistance.
However, an estimated 17% of ACA customers won't have the luxury to afford subsidies and those customers could find themselves with a tough decision whether to get coverage at a higher out-of-pocket premium or take the tax penalty.
Premiums will depend on geography
Researchers from Kaiser Family Foundation serendipitously released an analysis of next year's premiums on Monday. Using HHS data, it found that depending on where an individual lives, their premium before subsidies kick in widely varies. For example, "In 2017, the second-lowest silver premium for a 40-year-old non-smoker living in these cities will range from $227 in Providence, Rhode Island to $904 in Anchorage, Alaska, before accounting for the tax credit."
Coverage choice will vary
The report notes there are 167 payers participating in the ACA marketplace next year. While 83 issuers are leaving the exchanges, 15 new carriers are entering into the exchange. "Based on analysis at the county level, the average marketplace consumer can choose from three issuers in their county for 2017 coverage," the report stated. "Seventy-nine percent (or about four in five) of consumers will have a choice of two or more issuers, and 56% will have a choice of three or more."
Individuals seeking coverage through the marketplace can choose from an average 30 plans with an average of 10 plans per issuer, HHS noted. "Four out of five (79% of) consumers will also be able to choose between multiple issuers, and all consumers will be able to choose among plans with different combinations of premiums, out-of-pocket costs, networks of hospitals and physicians, and prescription drug coverage options," HHS stated in a press release.
Choice is highly touted by HHS. It stated that switching plans could save consumer an $28 per month (20% reduction, after tax subsidies) if they switched from their current plan to the lowest premium plan in the same metal level in their area.
Open enrollment begins on November 1 and ends on January 31, 2017.
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