As the second season of health insurance enrollment under the Affordable Care Act gets underway, there has been a lot of press about price increases in various states. As reported in the Inquisitr, it is true that this year many consumers are facing price hikes when renewing or selecting new health plans. But an important question that is being overlooked in a lot of the media is how do these price hikes compare with past increases in health insurance plans?
The New York Times’ Upshot blog addresses the issue of health insurance premium increases by saying “it’s complicated.” Writer Margot Sanger-Katz says that there is no simple answer to how much premiums are increasing.
“The bottom line is that it’s not easy to say simply whether premiums are going up, or by how much. The health law set up marketplaces that allow for state regulation of insurance and regional variation in prices. It also offers a wide variety of insurance plans. That’s the consequence of the structure the Affordable Care Act envisioned: lots of plans competing on price and features in local markets.”
Larry Levitt, a senior vice president at the Kaiser Family Foundation, a non-partisan organization that tracks health care and health insurance issues, made this statement.
“There are many ways of looking at this depending on what you care about. Are you looking at this from the perspective of a consumer looking to renew coverage? Are you looking at this from the point of view of a new person looking at their options? Are you looking at this from the perspective of federal budget?”
A basic way of looking at what is happening to health insurance premiums in the ACA marketplaces is to compare average premium increases for this year to historical premium increases. The media is filled with stories about people who are facing drastically higher premiums, but, largely left out of the conversation are those who have seen their insurance premiums go down under the ACA. So, where does the average premium increase for this year fall? The Kaiser Family foundation has some answers.
Because health insurance plans vary so widely from state to state — and premiums do as well — the Kaiser Foundation took a look at what they call the “benchmark” silver and bronze plans in each state. They compared the cost of each insurance plan for 2015 to the cost for the current year for a 40 year old non-smoker who earns $30,000 a year. Kaiser also considered the cost of the benchmark plan before and after any premium subsidies are applied.
They found that the benchmark silver plans in the health insurance marketplace saw anywhere from a 28.4 percent increase in Alaska, before subsidies were applied, to a decrease of 25.5 percent in Mississippi. The benchmark bronze plans saw a high for premium increases of 27.7 percent in Alaska, to a decrease of 17.1 percent in New Hampshire. Premiums for these health insurance plans range from a high of $488 a month in Alaska, to a low of $171 a month in New Mexico. Overall, the cost of the benchmark silver plan decreased in 23 states. In the other 27 states, premium increases tend to be moderate, coming in at five percent or less in 16 of those states.
Much of the reporting on health insurance premiums has focused on those premium hikes. But, as most people who have had health insurance for a while can tell you, premiums only ever go up. So how does this year’s increase in insurance premiums compare to previous years?
The National Conference of State Legislatures reports that before the ACA, it was difficult to find information about health insurance premiums. But in 2007, the Joint Economic Committee of the U.S. Congress released a summary of state by state average health insurance premiums. That report said that during the period between 2004 and 2006, premiums increased by an average of 8.8 percent annually nationwide. Here are some examples of premium increases during that period, compared to increases from year one to year two of ACA exchange purchased health insurance.
In Alaska, the state with the highest increase in insurance premiums this year, premiums increased by little over nine percent in 2005, and by 7.6 percent in 2006. In Mississippi, which saw a large decrease in premiums this year, the increases during those years were about the same as Alaska. The 16 states that are seeing premium increases of five percent or less this year all had higher percentage increases between 2004 and 2006. It is important to note that average health insurance premiums did not decrease in a single state during those pre-ACA years.
The bottom line in all of this is that the New York Times is correct. It’s complicated. What you will pay for your health insurance exchange premium depends mainly on three things:
- Who you are, particularly your age, and whether or not you smoke
- Where you live
- What type of coverage you choose
Some folks will make out better than in previous years, while some will pay considerably more. If you upgrade your coverage, naturally you will pay more. If you are coming over from a health insurance plan that was not compliant with the ACA, you will probably pay more. Trying to craft health insurance coverage so that everyone is happy in a country of 300 million is proving to be a daunting task, if not downright impossible. But, other programs that have started out life with less than favorable ratings are now part of the fabric of our society. As time goes on, will Americans view the health insurance overhaul known as the Affordable Care Act the same way?
[Image via Qwoter]