Some good news — and some concerning news — for health insurance premiums

September 5, 2014

For all of the dire warnings about health insurance premiums spiking in the coming year, the numbers this summer have been pretty ho-hum. Although no one's ever going to tell you that they're particularly happy about seeing their premiums go up, the overall landscape of rates in the individual market has shown relatively modest increases so far.

It's often hard to parse what's actually happening with premiums.They naturally vary from person to person, and there's plenty of variation at the local level. And the amount of federal assistance people get to purchase insurance depends on what type of plan they actually have.

One key metric to watch for in Obamacare's second year of enrollment is the cost of benchmark "silver" health insurance plans. These mid-range plans, which were especially popular in the first enrollment period, are important because they're used to calculate how much subsidy a person could receive for a plan purchased on an Affordable Care Act exchange. The second-lowest-cost silver plan offered in a particular area sets the benchmark for that subsidy, at which a person's premium contribution is capped. So if a person picks another health plan that costs more than the benchmark, that person will have to contribute more toward premiums.

A new Kaiser Family Foundation analysis this morning examining the prices of these benchmark plans in 16 cities finds that they will fall, on average, by .8 percent next year. That means some of the most attractive plans will be cheaper, and it could mean the federal government will pay less in subsidies than expected. Of course, this doesn't tell the whole picture of what's happening to rates across the country, but it provides some important insight into how the individual insurance market is shaping up for the second year of the ACA's expanded coverage.


Now the concerning news: in 12 of the 16 cities that Kaiser studied, at least one of the insurers that offered a benchmark plan in 2014 no longer has benchmark status for 2015. That means that insurer might have raised rates, or another insurer is offering lower prices in 2015. Either way, if a person remains enrolled in what used to be a benchmark plan, that person (assuming life circumstances haven't changed) will have to pay more toward their premium.

That's all to say that shopping around for insurance this year could be really important for the new Obamacare enrollees, who are particularly price sensitive. Yet past research also shows people generally stick with the plan that they have, even if they can get a better deal elsewhere.

The Obama administration has set rules trying to make it easy for people to do as little as possible to remain enrolled in their health plans in 2015. But that could come at a higher cost.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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