Health Plan Costs Jump Again

Costs Rising Across the Spectrum

Health Plan Costs Jump Again
October 14, 2015

As the open enrollment period for 2016 health insurance draws near, you may be re-evaluating the Affordable Care Act and how it affects you. It is easy to start a spirited argument on the subject, but one thing is not up for debate: multiple surveys and articles report that the cost of health care insurance plans is on the rise again.

Shoppers on the exchange can expect to see a crazy quilt of price increases as insurers assess the true costs of the mandated coverage properties of the ACA and medical care consumption over the past year. There are cases where exchange-based health plans are not increasing, but according to multiple sources, many exchange plans are asking for significant price increases.

A recent analysis by Agile Health Insurance said that insurers are requesting double-digit rate increases for almost one-third of the plans sold on HealthCare.Gov, and that every plan offered for three states (Delaware, South Dakota, and West Virginia) are asking for double-digit increases. Two of the larger state-run exchanges, California and New York, have shown more modest rate increases of 4% and 7%, but they are increases all the same.

It may not be as bad as it sounds for consumers. State insurance regulators are not going to approve all the requested increases and not all of the costs will translate to the insured, thanks to subsidies. A Kaiser Family Foundation (KFF) analysis shows that the most popular "silver" plans, the benchmark for subsidy calculations, will undergo moderate price hikes, likely producing a moderate rise in subsidies.

Employer-based plan costs are also rising. KFF's 2015 Employer Health Benefits Survey conducted during the first half of 2015 concluded that the premiums for single coverage as well as family coverage rose by 4% on average. Unfortunately, deductibles are increasing significantly, resulting in more out-of-pocket costs to employees.

Effectively, cost sharing is being shifted more toward employees in employer-based plans. That puts an even greater burden on employees since wages have not kept pace. KFF reports that over the last five years, the deductibles paid by employees across the U.S. have increased over six times faster than wages have increased.

Meanwhile, the "Cadillac tax" kicks in starting in 2018, and employers are already starting to adjust their plans to stay below the threshold level. Individual plans with premiums over $10,200 or family plans with premiums over $27,500 will be subject to a 40% tax. KFF suggests that as employers make adjustments to stay under the thresholds, costs will continue to be shifted toward employees.

Are federal employees getting a better break? Not really. The government recently announced that the enrollee portion of health insurance premiums for federal employees would increase by 7.4%. That is the largest increase in five years. Overall plan costs will be rising 6.4% on average.

Keep in mind that background reinsurance programs called "the 3 R's" are subsidizing the insurance companies during the Obamacare transition: risk adjustment, reinsurance, and risk corridor. Two of those three functions go away in 2016, meaning that most analysts expect the "true" rates of Obamacare to show up in the 2016-2017 prices — and they will likely be considerably higher regardless of the other market factors.

As you search for your own plan in the exchanges or deal with deductible increases in your employer-supplied health plan, just remember that the first "A" in the ACA stands for Affordable. If all these reports and surveys are correct, it is going to be increasingly hard to remember that.


Photo ©iStock.com/fotostorm

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Elaine | 10.14.15 @ 16:01
Not surprising
Daniel Dohlstrom | 10.14.15 @ 16:01
I am really not surprised at prices jumping again. Yet more reason to be sure and shop around when it is time to renew.
Sarah | 10.14.15 @ 16:01
It's already hard to remember what that A stands for...
Carla Truett | 10.14.15 @ 16:01
I'm so frustrated that our insurance premiums went up and our coverage went down. There has to be an end to this madness.
Erin | 10.14.15 @ 16:02
This just goes to show how important it is to shop around and make sure you're getting the best deal.
Sara | 10.14.15 @ 16:03
Why am I not surprised.......?? Sadly I have a feeling it will just keep going on.
Britt | 10.14.15 @ 16:04
Oh joy. My costs just went up not to long ago.
Angie | 10.14.15 @ 16:05
So much for affordable health care - it seems worse than before all of the changes.Write So
Steven | 10.14.15 @ 16:05
Does not surprise me much. Sadly all the prices are going up and care is going down.
Kailie | 10.14.15 @ 16:06
Sadly, this really isn't surprising at all .
Crystal | 10.14.15 @ 16:06
When will the craziness end? You can't keep jacking up costs yet not increasing wages. Beyond ridiculous.
Kyle | 10.14.15 @ 16:09
It's rather sad how much the prices for health insurance is becoming.
Steffanie | 10.14.15 @ 16:09
Is anyone shocked by this?
gracie | 10.14.15 @ 16:10
Prices have always increased at renewal time I don't think this is such a big surprise to most people. It's more of a surprise that the affordable care act is making things more expensive than they were to start with which is the opposite of what it was intended to do.
Alec | 10.14.15 @ 16:17
The AHA is getting out of hand. They can't realistically base everything off numbers on paper without taking into consideration that people have other bills to pay!
Bobbie | 10.14.15 @ 16:19
Not all all surprised by this. Already changed to lower coverage once because of the price increase. Not affordable before, and even worse with the new system.
Nancy | 10.14.15 @ 16:20
How much higher can I go? The prices I've been quoted from my family of three are twice the cost of my mortgage.
Amanda | 10.14.15 @ 16:23
Affordable is a joke!! Yes it's helped some out, but most it's hurt and people are losing wages, jobs, and having to decide what to pay. The more things go up the worse it will be, Job wages are staying the same, or people are being reduced to part time to avoid the costs, health care quality has dropped horribly, medication prices have sky rocketed. I for one will not take advantage of the health care scam, I rarely go to the doctor, I always pay up front, and save money for any future hospital bills. I can take the yearly fine cheaper than the yearly insurance.
Zanna | 10.14.15 @ 16:42
The true costs may not be evident until next year? Sounds like we're going to be spending more for health care, no matter how "affordable" the name says it is.
Meredith L | 10.14.15 @ 16:48
Tell you what - STOP the ridiculous lawsuits so doctors don't have to pay extraneous insurance and maybe our healthcare costs will actually be reasonable. Oh....but big pharma wouldn't like that, would they?
Jonathan | 10.14.15 @ 16:53
Is anyone really that surprised by this news?
Kathryn | 10.14.15 @ 16:54
Another price jump to make going to the doctor impossible.. Good job America.
$commenter.renderDisplayableName() | 12.06.16 @ 22:07
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