Should you worry about ACA hikes?

Modern Healthcare - - NEWS - By Shelby Livingston

Health in­sur­ance pre­mi­ums for bench­mark ex­change plans are set to rise 25% on av­er­age in 2017—an eye-pop­ping fig­ure that has fu­eled a new wave of at­tacks from Repub­li­cans seek­ing to dis­man­tle the health­care law.

But pol­icy ex­perts say the pro­jected dou­ble-digit hikes are un­likely to af­fect the ma­jor­ity of peo­ple who en­roll in health plans through the fed­eral ex­change.

The fourth open en­roll­ment kicks off Nov. 1 and will run for three months. The lat­est HHS re­port, re­leased last week, shows the av­er­age bench­mark plan pre­mium in 2017 will be $302, com­pared with $242 in 2016. HHS uses the sec­ond-low­est cost sil­ver pre­mium for a 27-year-old be­fore tax cred­its as its bench­mark. It’s the most pop­u­lar plan on the ex­changes and the one used to cal­cu­late pre­mium sub­si­dies.

The HHS data don’t in­clude rates in states that op­er­ate their own ex­changes. But HHS said bench­mark pre­mi­ums would in­crease at the lower rate of 22% in 2017 af­ter in­cor­po­rat­ing data from four state-based ex­changes for which data is avail­able.

Pre­mium hikes var­ied widely across the 39 states us­ing the fed­eral Health­Care.gov ex­change. Ari­zona will ex­pe­ri­ence the largest av­er­age in­crease for the bench­mark plan at 116%, ac­cord­ing to HHS. Bench­mark plan pre­mi­ums will rise 69% on av­er­age in Ok­la­homa and 63% in Ten­nessee.

At the same time, bench­mark pre­mi­ums in some states, in­clud­ing Arkansas, In­di­ana and Ohio, will in­crease only slightly or even de­crease in 2017.

That “tremen­dous volatil­ity” re­flects is­sues some states are hav­ing with low par­tic­i­pa­tion, said Chris Sloan, se­nior man­ager with con­sul­tant Avalere Health. In many states, where in­sur­ers like Unit­edHealth Group, Aetna and Hu­mana pulled out or dras­ti­cally scaled back ex­change par­tic­i­pa­tion,

Many in­sur­ers still sell­ing cov­er­age on the fed­eral mar­ket­place have to raise pre­mi­ums dras­ti­cally to make up for pric­ing too low in pre­vi­ous years.

states “were scram­bling to get in­sur­ers to stay” and ended up hav­ing “to let them price how they wanted to price,” Sloan said.

Many in­sur­ers still sell­ing cov­er­age on the fed­eral mar­ket­place have to raise pre­mi­ums dras­ti­cally to make up for pric­ing too low in pre­vi­ous years. Dur­ing the first two years of the ex­changes, pre­mi­ums var­ied widely from state to state as in­sur­ers fig­ured out how to set pre­mi­ums with very lim­ited data on the pop­u­la­tions and new reg­u­la­tory re­quire­ments es­tab­lished by the Af­ford­able Care Act, said Cyn­thia Cox, an as­so­ciate director and health in­sur­ance re­searcher at the Kaiser Fam­ily Foun­da­tion.

“Some in­sur­ers guessed wrong,” she said. Ari­zona, Ten­nessee, Min­nesota and parts of Penn­syl­va­nia had “ab­nor­mally low” ex­change plan pre­mi­ums in the early years and are now hik­ing their rates to cover costs. The prices for next year now fall more in line with what the Con­gres­sional Bud­get Of­fice pre­dicted sev­eral years ago.

Other fac­tors driv­ing the pre­mium hikes are sicker-than-ex­pected cus­tomers and states’ de­ci­sions. States that ex­panded Med­i­caid and did not al­low in­sur­ers to keep sell­ing tran­si­tional “grand­moth­ered” plans likely have health­ier mar­kets and lower pre­mium hikes to­day, Cox said. HHS said the phase­out of two of the health­care law’s pay­ment pro­grams to help in­sur­ers in the early years of the ex­changes isn’t help­ing pre­mium mat­ters ei­ther.

Still, the ma­jor­ity of ex­change cus­tomers won’t see a 25% in­crease in pre­mi­ums, though they may see a bump. Most en­rollees will be in­su­lated be­cause they are el­i­gi­ble for tax cred­its, which are avail­able for peo­ple mak­ing less than 400% of the fed­eral poverty level and who don’t have em­ployer­based in­sur­ance. Cost-shar­ing sub­si­dies are avail­able to peo­ple who earn less than 250% of poverty and choose a sil­ver plan.

In to­tal, HHS es­ti­mates 78% of in­di­vid­u­als who are unin­sured, pur­chase mar­ket­place cov­er­age or buy in­di­vid­ual cov­er­age out­side of the ex­changes have in­comes low enough to qual­ify for sub­si­dies in 2017.

Ad­di­tion­ally, 77% of re­turn­ing mar­ket­place cus­tomers will be able to find a plan for $100 per month or less, and 72% will be able to find a plan for $75 or less per month. But that may re­quire shop­ping around—and could force some con­sumers to choose new doc­tors.

“If you have a plan that cov­ers your doc­tor and med­i­ca­tions and it goes up, there’s a chance other plans aren’t go­ing to meet your needs quite as well,” Sloan said. “On the plus side, some­times you can find a bet­ter deal.”

About a fifth of ex­change cus­tomers will have only one in­surer’s plans to choose from dur­ing open en­roll­ment.

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