HealthCare.gov has reopened for business. For the next month, Americans obtaining health coverage through the Affordable Care Act (ACA) marketplaces face an open-enrollment period during which they can shop for, select and switch insurance plans.
Americans want to know if these plans are affordable, and whether the ACA is slowing the growth of the cost of health care in the United States. To look at the early reviews, the news isn’t good. “Cost of Coverage Under Affordable Care Act to Increase in 2015,” was the headline on a front-page New York Times article on Saturday. A Washington Post analysis determined that HealthCare.gov users will have more choices than last year, “but the options usually will be costlier.” Stories from other news outlets highlighting ACA’s higher costs include those found here and here.
Not surprisingly, Republican critics of the ACA have seized upon these reports as more evidence of its disappointments. “This year, many who like their plan will likely have to pay more to keep it,” said Sen. Orrin G. Hatch (R-Utah).
All of these conclusions are accurate. The estimates are fuzzy, but the consensus is that premiums will be rising across the country for the typical marketplace customer. Based upon data released last week by the U.S. Department of Health and Human Services, the Kaiser Family Foundation estimates that premiums will increase in the average county by 2 percent (for mid-range plans in the “silver” category) to 4 percent (for lower-cost “bronze” plans). In its analysis of the same data, the New York Times determined that silver plan premiums would rise 4 to 5 percent. Widely reported estimates by the Avalere Health consulting firm similarly found premiums rising 3 to 4 percent.
So yes, ACA premiums are rising. But most reporting on these numbers has lacked a critical bit of historical context. These price increases are no higher than recent premium increases on plans provided to Americans by their employers. Since 1999, the Kaiser Family Foundation has interviewed a nationally representative sample of employers about the health insurance they offer. The graph above displays changes in the average annual premiums paid for single and family coverage since 2000. Before 2007, increases were at least 5 percent per year. Since then, premiums have been rising more slowly, with the median increase at about 4 percent per year. Shown alongside these figures is the range of estimates published over the past few days on expected premium increases on plans in the ACA marketplaces. They’re no different from recent trends in premiums for employer-sponsored plans.
Some Americans may need to “shop around” for a “better deal” (as HHS officials are putting it) — particularly those who face a price increase from their current insurer. But here again, context is helpful. More than half of the firms in the Kaiser Family Foundation survey reported doing the same thing last year: 58 percent said they shopped for a new plan or a new insurer, and 27 percent of those who shopped changed carriers.
In sum, the ACA marketplaces feature competition, they require comparison shopping and — if these estimates hold — their plans’ premiums are rising at the same rate as those offered elsewhere. So far, HealthCare.gov’s second act looks an awful lot like that of the rest of the health insurance market.