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Obamacare makes actually shopping for health insurance really important

Health insurance forms: Americans' least-favorite pastime? (Andrew Harrer/Bloomberg)

Yesterday, I wrote about inertia in health plans — people generally stick with their coverage year-to-year if they can help it, even if it means missing out on a better deal. Today, the consulting firm Avalere Health demonstrates why that could be an especially troublesome thing for low- and middle-income people enrolled in the new exchange health plans.

This gets into the mechanics of Obamacare subsidies, so just bear with me for a bit. The level of subsidy is tied to the premium for the second lowest-cost "silver" plan in a particular area — these "benchmark" plans generally have lower premiums, and most people in 2014 gravitated to the lowest-cost and second-lowest cost plan. If you signed up for an exchange plan that had a higher premium, you could still get a subsidy, but you have to pay the difference between that benchmark and the plan you picked.

So, here's why shopping around for health insurance becomes especially important. Looking at just the proposed rates for 2015 health plans in nine states, six of those states could see health plans lose their benchmark status in 2015. That means if people stay in those plans, their premium subsidy won't go as far. Of course, these are just proposed rates in just a few states that could still change — but this underscores how the exchange landscape could shift pretty dramatically year-to-year.

Avalere illustrates this with the example of a Maryland woman earning $17,500 a year enrolled in a 2014 benchmark plan with a $214 monthly premium. The Affordable Care Act caps her contribution to 4 percent of her income, meaning she actually only pays $58 per month.

Avalere projects her plan’s premium will increase to $267 per month in 2015 and lose benchmark status – instead a separate plan costing $231 will be the new benchmark. The difference between her plan and the new benchmark ($36) is added to the ACA income cap ($58), meaning she’d actually pay $94 a month for premiums in 2015. She gets a richer subsidy in 2015, but she still has to pay more. Here's what that looks like:

This is hypothetical, naturally, but it demonstrates the possible steep cost of not shopping around.

Federal guidance was just issued Thursday afternoon that's supposed to make it easy for people to stay in their current exchange plans in 2015, but the Obama administration said it wants people to explore their plan options. There was also plenty of frustration with the technical problems experienced in the past open enrollment period — improving upon that in 2015 will be important for encouraging consumers to shop around.