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2017 Exchange Premium Analysis

By June 23, 2016Commentary

There has been a lot of discussion so far on what 2017 premiums on the health insurance exchanges will be, particularly since a number of large insurers have exited some markets and others have indicated they are sustaining significant losses on exchange business.  The Kaiser Family Foundation has issued an interim report, covering 13 states and DC, focussing on the lowest and second-lowest cost silver plan premiums, because those plans are the most commonly selected (68%) and the second-lowest silver plan cost is the subsidy reference point.   (KFF Brief)   The authors also focus on major cities in those states, which makes sense since that is where the population is, but also likely understates the premium increase, since many rural areas are now down to one plan.  In those major cities, the cost of the second-lowest silver plan will increase a weighted average of 10%, with a range from a drop of 13% to an increase of 18%.  Most of these premium changes are preliminary and subject to state review, but it appears very likely that the increase will end up being higher than 2016’s 5%.

Insurer participation is also down in half the markets analyzed, often due to the withdrawal of UnitedHealth from many markets.  Several cities have only 2 to 4 participants, while New York has 16, Oregon 11 and Colorado 10.  There are dramatic price swings in many areas.  For example, Providence, Rhode Island has preliminary requests suggesting a 14% decline in premiums, after a 6% increase in 2016.  Denver, Colorado, on the other hand has “only” a 14% increase after a 29% increase in 2016; and Portland, Oregon has a 26% increase after a 13% in 2016.  In the areas in the analysis, from 2014 to 2017, the average silver premium will have increased 5% per year.  In actual dollars, for 2017 the range would be from $192 per month for a 40 year-old non-smoker in Albuquerque to $482 in Burlington, Vermont.  (Gee, isn’t Vermont the socialist paradise home of Bernie Sanders and the location of the failed single-payer experiment.  How can costs be so high there!!)  The weighted average is $307 a month.  There does not seem to be a consistent pattern of areas which started out lower seeing higher increases or vice versa.  There does seem to be a pattern of the low-cost insurer in one year not being the low-cost one the next.  Apparently plans are taking turns being stupid in their rate-setting.  It does highlight the importance of member price-shopping every year.   And, once again, what is very clear is that health care coverage costs are going up much faster than personal income.  That is a recipe for more financial pain.

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