In an ironic twist, the Affordable Care Act – signed into law in 2010 and largely enacted in 2013 – has seen premium increases with each passing year, with a number of exchange policyholders opting to delay medical treatment as a result.
A newly released report suggests history could end up repeating itself in 2017, but the degree to which premiums rise may vary widely.
Look for double-digit premium growth in several states
Among silver metal plans – where consumers are responsible for 30 percent of medical costs – double-digit premium increases are expected in several states next year, based on a recent study conducted by health care consultancy Avalere Health. For instance, in Maine, premiums for a hypothetical 50-year-old male who doesn't smoke are anticipated to swell by 18 percent, going from $495, on average, to $583. Meanwhile, in Virginia, premiums are poised to jump by nearly 20 percent, averaging $538 from this past year's $451. In Washington State, premium growth is forecast to be a more palatable 5 percent.
In the nine states examined, ACA premiums in 2017 are expected increase by 12 percent year-over-year, costing the typical nonsmoking 50-year-old male $503, the report forecast.
Avalere Senior Vice President Elizabeth Carpenter noted that one encouraging aspect of the projected rise in health care costs is that they likely won't be as dramatic as they have in recent history.
"In most states, premiums for the lowest cost plans appear to be rising less than for the silver metal level as a whole," Carpenter explained.
Another silver lining in the projected price growth for silver plans is consumers who are eligible for financial assistance may not have to shoulder the brunt of the expense.
"Despite premiums rising overall, many consumers will be insulated from higher rates due to premium subsidies that limit monthly costs for many exchange enrollees," said Caroline Pearson, Avalere Health Director. "Consumers may have to switch plans in order to avoid dramatic rate increases, but competitive options should still be available in most regions in the U.S."
Tax credits have helped many Americans who aren't covered via employee benefits defray a good portion of their health care expenses. Nearly 85 percent of people who enrolled or re-upped in the federal or state-based exchanges at the beginning of the year were eligible for tax credits, saving themselves nearly $300, according to numbers published earlier this year by the U.S. Department of Health and Human Services.
Things may change
Even though Avalere does anticipate premiums to increase in 2017, the report emphasized that this projection is far from certain, as final rates won't be known until the end of 2016 draws closer. What is for sure is that 2017 marks the end of the ACA's temporary premium stabilization programs. The risk corridor and reinsurance programs were installed when the health care overhaul was first passed in order to prevent health care costs in the independent and small group markets from rising all at once. Their phased-out removal may lead to more participating insurers deciding to raise rates, the report said.
Cost-prohibitive operational expenses is the prime reason why major health insurers are deciding to bolt from the exchanges, perhaps none more prominent than United Healthcare, the nation's largest health insurer. Only 30 percent of carriers saw their margins increase in 2014 and 2015, the first two open enrollment periods at HealthCare.gov, according to a recent report from management consultancy McKinsey & Company. At the state level, earnings were more wide ranging. For instance, in California, 95 percent of carriers had positive margins. However, 18 states saw fewer than 5 percent of participating carriers turning a profit.
