Thursday, October 27, 2016

Most ACA customers won't see major premium hikes

Oct 26, 2016 | By Jack Craver

Premiums are definitely going up for health plans sold through the Affordable Care Act individual marketplace.

However, most ACA customers will not see the types of double-digit hikes that have garnered headlines and served as a cri de guerre for ACA opponents in the last weeks of the 2016 election campaign.

Instead, it appears that a minority of ACA customers will be subject to high premium increases, while the majority will see only a modest rate hike.

For starters, the widely-publicized estimate from the Department of Health and Human Services that ACA plans will increase by an average of 25 percent is based specifically on what it would cost a 27-year-old to buy the second cheapest silver-level plan through the marketplace, before tax credits.

As ACA premiums rise, said Aetna CEO Mark Bertolini, young people will choose beer over health insurance.

The price for that benchmark plan will increase by an eye-popping 116 percent in Arizona, 69 percent in Oklahoma and 63 percent in Tennessee. However, in a number of other states, the premiums will go up only slightly. In a couple of states they will even decrease.

Many states that are seeing the biggest increases also had some of the lowest premiums, including Arizona, Tennessee and Minnesota, Cynthia Cox of the Kaiser Family Foundation told Modern Healthcare.

Another widely-neglected point is that it’s not always customers who will be bearing the brunt of the major premium hikes. Seventy-seven percent of marketplace customers qualify for subsidies, either in the form of tax credits that offset the cost of their plan or, in the case of those with the lowest incomes, cost-sharing subsidies that lower the price of their premium.

As a result, HHS estimates, roughly 77 percent of ACA customers can find a plan that costs them less than $100 a month and 72 percent could find one for less than $75. 

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