A CNN article (Obamacare sticker shock: Big rate hikes proposed for 2016) earlier this month certainly made things sound dire:
Hold onto your wallets… many insurers want to substantially hike rates on Obamacare policies for 2016.
Many are proposing double-digit premium increases for individual policies, with some companies looking to boost rates more than 60%…
In Florida, for instance, United Healthcare wants to raise the rates of plans sold on the Obamacare exchange by an average of 18%. Individual policies available outside the exchange through United Healthcare or through a broker would go up by 31%, on average, with hikes as high as 60% for certain plans in certain locations.
In Texas, insurer Scott & White is looking for a 32% increase for exchange-based plans, while Humana is asking for an average 30% boost for its exclusive provider organization policies, which generally cover only in-network services.
That sure sounds pretty bad. And maybe it’s true, since Florida and Texas are such screwed up healthcare markets. Our small business has experienced Obamacare-driven rate hikes as well, so it’s not like I’m unsympathetic.
But I put a lot more faith in a new analysis from Avalere Health, which did a thorough analysis in the eight states where complete 2016 premium information is available. What they found is that Silver plans (bought by 68 percent of exchange enrollees) had proposed average premium increases of 5.8 percent, and that the premium for the lowest cost silver plan was rising only 4.5 percent. Keep in mind these are the proposed rates –actual increases may be lower.
Click the image below for a better view of the Avalere analysis.
The cheapest plan one year might not be the cheapest plan the next year, so enrollees might need to shift plans to keep their premiums low. And this fact points to the most significant omission from the CNN. United may be raising its rates by 18%, but as long as a competitor is offering lower premiums, consumers still have options. In addition, consumers who receive subsidies –and that’s most people– won’t necessarily feel any change.