Customers started to shop for health insurance on federal and state exchanges that were formed under the Affordable Care Act (ACA) on November 1 for the insurance coverage that begin in 2017. As per the estimates of the Obama Administration, 1.1 million new people will enroll in a plan this year, and the total enrollment is estimated to reach 13.8 million.
In the year 2016, 12.7 million people enrolled in health plans under ACA, but only 10.5 million people maintained the health coverage over the year. Consequently, the Obama Administration believed that of the total 13.8 million expected enrollees, only 11.4 million will maintain the coverage for the 2017 plan.
Health premiums are increasing like most of the years. However, the Department of Health and Human Services (HHS) Assistant Secretary for Planning and Evaluation (ASPE) says that the premiums are increasing much more than usual now. The benchmark plan for each market that decides the financial subsidies, the second-lowest cost silver plan premiums are increasing by an average of 25 percent across the nation. Reports say that the insurance plans showed an increase of only 7.5 percent, last year.
Many of the consumers will not be affected by the increase in premiums, as most of the customers who are purchasing insurance via exchange are eligible for Advance Premium Tax Credit subsidy. As per ASPE, after considering the Advance Premium Tax Credit, most of the customers will be able to find a silver or bronze level plan below hundred dollars. However, these plans will be available with higher co-pays and deductibles than the users have been paying.
Yet again, challenges are faced not only by the consumers, but also by the insurers. Many of the insurers have lost money on exchange, and thus, some providers like UnitedHealth, have pulled out of most exchanges in 2017. Although there are few exchanges that are profitable, these are turning very small profits. Those health plans that remain in exchange hope that the increase in premiums will reverse financial losses.
Factors contributing to the financial problems of exchanges includes the expiration of two of the three risk adjustment programs and higher than expected costs for the insurers. In addition, it seems that insurers have underpriced their products in the previous years. This can be because of the lack of data from the upstart exchanges, or due to the over-reliance on the risk adjustment programs that are ending soon.
As many years of data is available now, the increase in premiums may reflect a more accurate cost to insure the exchange population.