Keeping Your Health Law Plan May Mean Premium Hike
Many of the 7 million consumers who got insurance under President Barack Obama's health care law will see their premiums rise next year unless they switch to another plan, independent analysts said as the government released details Friday.
The Health and Human Services department released a massive computer file of 2015 premiums one day ahead of the start of open enrollment. Those numbers will take time to fully analyze.
Overall, the premiums for a type of low-price plan that the government uses to set subsidies for consumers will cost roughly the same as this year, about $330 a month on average. Many people will pay much less after subsidies, about 25 percent of the cost, which will be good news for first-time customers.
But there is a catch if you are already a customer: Your plan may no longer be the lost-cost benchmark in your community. In that case, you’ll pay more unless you switch.
“Just because you enrolled in a low-cost plan this year is no guarantee that your plan will also be low-cost next year,” said Larry Levitt of the nonpartisan Kaiser Family Foundation. He analyzed a 48-city sample of 2015 premiums from data available earlier this week.
“Last year’s low cost plans will experience premium increases, meaning the majority of consumers will experience cost increases if they re-enroll in the same plan,” said Caroline Pearson of Avalere Health, a private market analysis firm.
An early look by Avalare at premiums for a hypothetical 50-year-old nonsmoker in the benchmark plan found wide differences among states, from a 28 percent increase in Alaska to a 19 percent reduction in Mississippi. Most states saw single-digit changes.
Consumers should be wary of national and even state averages, and instead focus on what’s happening with their own plan, the analysis said.
The shifts are due to the ups and downs of the market, and to cost-saving provisions written into the law.
The Affordable Care Act offers subsidized private health insurance to people who don’t have access to coverage on the job. HealthCare.gov and state insurance markets are launching their second annual sign-up season, which runs through Feb. 15. This year, 85 percent of their customers received tax credits to subsidize their premiums.
Those existing customers will be renewing coverage for the first time. Some could face sticker shock.
The following example uses actual premiums from HealthCare.gov, and was provided by the Kaiser Foundation:
Take a hypothetical 40-year-old retail salesperson in Miami making $20,000 a year. This year, she signed up for the benchmark low-cost plan in her area, the “Coventry $10 Copay.” The full premium was $270 a month. Her government tax credit covered $184 of that, so her share was $86 a month.
For 2015, Coventry is no longer the benchmark plan. Instead, it’s the “Molina Silver HMO,” with a monthly premium of $274. If the consumer switches to Molina for 2015, the government will pay $191 and her share will be $83.
But if she wants to stay with Coventry, she’ll see a 40 percent increase.
That’s because Coventry increased its premium to $311 for 2015. And also, the federal share will be capped at $191 – what the government would pay for the benchmark Molina plan.
The consumer would be on the hook for $120 a month.
Part of the reason for such shifts is that the health care law was designed like a voucher system.
You get a tax credit for health insurance based on your income and on the premium for the benchmark plan in your area, called the “second-lowest-cost silver plan.” Plans are offered in four “metal levels” of coverage: bronze, silver, gold and platinum. The benchmark silver plan can change every year based on bids submitted by insurers.
If you pick a higher-cost plan, or if you stay in a plan that has lost its benchmark status, you are responsible for the entire difference in premiums.
The idea was to create incentives that would force insurers to compete and keep premiums low.
Competition is helping to drive down the price of the benchmarks, said Levitt, which is good for the federal budget. “But competition is also messy, particularly for consumers.”
Some Republicans saw the predicament as more fodder for their campaign against “Obamacare.”
“Last year, many who liked their plan were surprised to learn they couldn’t keep it,” said Sen. Orrin Hatch, R-Utah. “This year, many who like their plan will likely have to pay more to keep it.”