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Premium Rates on Affordable Care Act Exchanges Rise 25% in 2017

The rise in premiums on the Affordable Care Act exchanges has led to a debate on whether to fix the ACA or repeal and replace the healthcare law.

Monthly premium costs on the Affordable Care Act exchanges is expected to rise an average of 25 percent in 2017, according to a report from the Department of Health & Human Services (HHS). This percentage is based solely on the premiums for HealthCare.gov states. When looking at state-based marketplaces along with the HealthCare.gov states, the average increase in premiums for 2017 is predicted to hit 22 percent.

Affordable Care Act

The rise in the cost of monthly premiums on the Affordable Care Act exchanges is due to a variety of issues including the financial losses commercial payers have faced in this new market along with the curtailing on the reinsurance program, reports the Henry J. Kaiser Family Foundation.

The Kaiser Family Foundation report looked at one of the most popular health plans available on the Affordable Care Act exchanges: the second-lowest silver plan. The results show that, in 2016, premiums for the second-lowest silver plan varied from $186 per month in Albuquerque, NM to $719 in Anchorage, AK for a 40-year-old non-smoker individual.

While many may be concerned with the average premium increases, the rates vary drastically across states. In 10 states, the premium rise is actually at 7 percent or less while premium rates grew more than 50 percent in seven other states. One interesting finding is that some of the states with the highest rise in premiums haven’t expanded their Medicaid programs while the states with the lowest rise did partake in Medicaid expansion.

The majority of those purchasing coverage on the Affordable Care Act exchanges, as many as 85 percent of enrollees, are eligible for tax subsidies, which does decrease their overall premium costs. Nonetheless, these subsidies do come from the taxpayer at the end of the day.

The HHS report outlines how the average premium rate for the second-lowest silver plans rose by 2 percent in 2015 and by 7 percent in 2016. For 2017, however, an even larger growth is expected for second-lowest silver plans. Nonetheless, these rates still fall below the initial projections that the Congressional Budget Office predicted before the Affordable Care Act exchanges were operational.

The average premium rate increase on the Affordable Care Act exchanges are much higher than in prior years. In 2016, the average premium rate rose by 7.5 percent while in 2015, it grew by 2 percent. Clearly, the rising costs of health plans available through the Affordable Care Act exchanges will need to be solved in the coming years.

While the Republican Party is looking to repeal and replace the Affordable Care Act, Democratic presidential nominee Hillary Clinton has promised to build on and fix the problems associated with the Affordable Care Act. In particular, Clinton is looking to expand the Medicaid programs in 19 states that haven’t done so and hold 3.7 million Americans that fall into a coverage gap.

On the other side of the argument, The Institute for Policy Innovation sees little in the Affordable Care Act that is worth keeping, according to a press release. Institute for Policy Innovation (IPI) Resident Scholar Merrill Matthews, Ph.D., expects health insurance rates to keep rising due to the provisions of the ACA.

“Anyone who thinks health care prices and spending will go down when you expand health coverage to millions of uninsured, force insurers to cover many more procedures, and pump in hundreds of billions of federal tax dollars is a fool,” Matthews said in a statement.

“These premium increases have resulted in, and will continue to cause, millions of Americans shifting to very high deductibles, which will push even more younger and healthier people out of the health insurance market,” Matthews continued.

With more insurers like UnitedHealthcare and Aetna decreasing their participation on the Affordable Care Act exchanges or leaving altogether, the declining competition in this marketplace may also be leading to a rise in premium costs. FreedomWorks CEO Adam Brandon said in a public statement that the premium increases will continue and the only solution will be to repeal and replace the Affordable Care Act.

“It has become very apparent to many Americans just how unaffordable the so-called Affordable Care Act really is,” Brandon said. “Conservatives warned from the start that ObamaCare would lead to significant premium increases and less competition on the exchanges, but the Obama administration and Democrats continued to lie to the American people.”

“ObamaCare is a disaster. Doubling down on the law, as President Obama has done and Hillary Clinton will continue to do, will only make these problems worse. ObamaCare cannot be fixed. It must be repealed and replaced with a patient-centered alternative,” he concluded.

The future of the Affordable Care Act will depend upon the next presidential election where both the executive office and the Senate will work toward reforming healthcare coverage.

Image Credits: Department of Health & Human Services

 

Dig Deeper:

How Payers Could Succeed in ACA Health Insurance Exchanges

How the Affordable Care Act Changed the Face of Health Insurance

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