Expect big hikes in Obamacare premiums next year
The CEO of America’s Health Insurance Plans (AHIP) said in an interview that Obamacare premiums would rise substantially next year due to market shifts and rising health care costs.
Marilyn Tavenner, who managed the disastrous Obamacare rollout as director of the Centers for Medicare and Medicaid Services, gave no numerical prediction but made clear that across the board, Obamacare premium hikes are coming.
“I’ve been asked, what are the premiums going to look like?” she said. “I don’t know because it also varies by state, market, even within markets. But I think the overall trend is going to be higher than we saw previous years. That’s my big prediction.”
If Tavenner is right, Obamacare will jump dramatically—last year’s premium for the popular silver-level plan surged 11 percent on average. Although Tavenner didn’t mention deductibles, in 2016, some states saw jumps of 76 percent, while the average deductible for a 27-year-old male on a silver plan was 8 percent.
The warning to consumers from Tavenner, the former administration official who headed the Center for Medicare and Medicaid Services (CMS) and oversaw the disastrous launch of HealthCare.gov, the Obamacare website, comes at a time of growing uncertainty about the evolving makeup of the Obamacare health insurance market. With many insurers struggling to find profitability in the program, the collapse of nearly half of the 23 Obamacare insurance co-ops and this week’s announcement that giant UnitedHealth Group intends to pull out of most Obamacare markets across the country, anticipating future premiums and copayments is largely risky guesswork.
Premiums for the current 2016 season rose on average by 8 percent over the previous year, with 12.7 million Americans enrolling for coverage and government subsidies, according to CMS. Federal officials stress that the average rate doesn’t tell the whole story, and that in many cases after consumers shop around for the best price and government subsidies are applied, the actual premium increase is lower.
Many insurers will try to keep the increases down by raising deductibles. In many cases, Americans are purchasing plans with higher deductibles than the plans they had before Obamacare became law. This is another promise gone by the boards when Obamacare was being sold to the public.
If insurance companies don't receive the increases they need to be profitable, there will be many more exits from the exchanges. At some point, the entire system could collapse. No one is sure where the tipping point is, but with fewer plans to choose from next year and a big increase in rates for less coverage, the consumer will probably let us know when the end comes.