November 3, 2015

Enrollment Opens to Higher Premiums


  • The premium increase for benchmark silver plans on the federal exchange – 7.5 percent – is more than triple last year’s increase. For Obamacare’s lowest-tier plans – bronze plans – both premiums and deductibles are higher.

  • As Obamacare struggles to bring in young and healthy enrollees – and insurers get more data about enrollees’ costs – prices will keep rising.


Obama Administration Downplays Premium Increases

Open enrollment started on Sunday, and premiums under Obamacare increased dramatically between 2015 and 2016. The Obama administration chose to release premium data on just one category of insurance: the second-lowest priced silver plan in each market in the federal exchange. Even this hand-selected data is troubling.

Many States See Double Digit Rate Hikes

table-premium-increases-with-plus-signs-

According to the administration, premiums for benchmark silver plans on HealthCare.gov rose by a weghted average of 7.5 percent for 2016. That’s more than triple last year’s 2 percent hike and double the 3.7 percent rate of health care inflation. It is also far more than the pay raises most Americans got: average hourly earnings have risen by only 2.2 percent over the past year.

Additionally, the administration’s advertised sticker price hides the pain many Americans are feeling as they sign up for next year’s coverage. The unweighted average increase is 11.5 percent. The Obama administration’s spin weighs more heavily the changes in states with higher enrollment. That’s cold comfort to people living in less populous states, who get hit with far larger price increases. Premiums have soared by double digits in more than half of the states using the federal exchange. These people are stuck with Obamacare’s limited choices and steep rate hikes.

Bronze Plans Get Even Worse

Even in states where the benchmark plan premium increased only by the administration’s official average, many people cannot afford the price. They are looking for a cheaper option to satisfy Washington’s insurance mandate. For them, Obamacare’s lower-tier bronze plans are the only option. Bronze plans tend to have the lowest premiums and the highest consumer cost-sharing. The plans must pay 60 percent of a patient’s costs, with the customer covering the other 40 percent. People who buy bronze plans this year are seeing their premiums jump by an average of 12.7 percent, according to a review by Investor’s Business Daily. Deductibles for these plans have risen by an average of $420 – or 7.4 percent – to $5,653.

Obamacare Bronze Plan Premiums Surge Chart

The analysis reviewed 2016 premium rates in one major metro area in each of the 37 states using HealthCare.gov. These are the sample locations the administration has used for some of its analyses. The premiums in 22 of these places have grown by 10 percent or more for this enrollment season. Some of the increases are shocking: Anchorage’s cheapest bronze plan costs 46 percent more; Nashville’s is 35 percent more; and Oklahoma City’s cheapest plan is 32 percent more.

Rates Will Keep Rising

Premium hikes for 2016 tell us more than last year’s rate increases did. When insurers were setting their prices for open enrollment at the end of 2014, they had very little data about their new customers. They made educated guesses, and often erred on the side of setting prices low to gain market share. This year, insurers have more complete data on how much health care their customers have been using. These customers tended to be older and sicker than expected, while young and healthy people opted to stay uninsured. As long as that imbalance persists, rates will keep rising, which makes healthy people even less likely to sign up as future years’ premiums are set. The administration has already cut the 2016 enrollment projections in half, and it acknowledged the difficulty in signing up new customers. None of this bodes well for Obamacare.

Co-op Failures Worsen

This past weekend, Arizona’s Meritus became the 11th Obamacare co-op to collapse. Meritus served about 55,000 members, who will need to quickly find new health insurance. These members are among 700,000 across the country forced to find new health insurance due to co-op collapses.

Meritus received more than $93 million in taxpayer loans. Obamacare’s co-op program was established with $2.4 billion in taxpayer loans. To date, nearly half of the 23 co-ops established by the program have failed. These 11 failed co-ops received over a billion dollars in taxpayer loans that will likely be lost.

Issue Tag: Health Care