Silver-Level Federal Exchange Plan Premiums To Increase by 7.5%

Premiums for silver-level health plans sold through the federal exchange for 2016 will increase by an average of 7.5%, according to HHS data released Monday, the Wall Street Journal reports.

The Affordable Care Act's upcoming open enrollment period begins Nov. 1 (Armour, Wall Street Journal, 10/26).

Premiums for silver health plans increased by an average of 2% from 2014 to 2015 (Goldstein, Washington Post, 10/26).

The second-lowest cost silver plans serve as a benchmark for calculating the subsidies that consumers can receive to help gain insurance. The amount of the subsidies varies depending on benchmark premiums in consumers' local markets (Ferris, The Hill, 10/26).

Single-Digit Increases for Most Plans, Though Rates Vary by Market

For 60% of those buying health insurance through the federal exchange, premiums will rise by an average of 6.3%, according to HHS (Wall Street Journal, 10/26).

According to Politico, the rate changes will vary by local insurance market. In Alaska, Montana and Oklahoma, for example, premiums will increase by more than 30%, while premiums will decrease by an average of 12.6% in Indiana (Demko, Politico, 10/26).

Why Premiums Are Increasing

According to the Journal, insurers requested premium increases for 2016 because:

• Many found the costs associated with providing exchange coverage exceeded their projections; or
• They experienced financial losses in previous years.

Further, insurers experienced increasing prescription drug spending over the past year and received lower payouts than expected under the ACA's risk corridors program (Wall Street Journal, 10/26).

According to the Post, analysts had predicted greater premium increases for 2016 than they had for 2015. Larry Levitt, a senior vice president at the Kaiser Family Foundation, said, "This is the first year that insurers actually have a full year of experience with how much care people use," adding, "In the first two years of the program, insurers were essentially guessing" (Washington Post, 10/26).

Reaction

HealthCare.gov CEO Kevin Counihan said, "For most consumers, premium increases for 2016 are in the single digits, and they will be able to find plans for less than $100 a month."

Separately, Cheryl Fish-Parcham, director of Families USA's private insurance program, said the 7.5% average increase "is lower than [was] forecast in the spring." She added, "It shows the rate review process has worked in many states" (Wall Street Journal, 10/26).

Federal Exchange Features More High-Deductible Health Plans

In related news, insurers participating in the federal exchange will offer more high-deductible health plans during the upcoming open enrollment period than they did in past years, Modern Healthcare reports.

According to Modern Healthcare, most of the plans available through the federal exchange for 2016 will have high deductibles. For example, 58 of the 69 health plans offered for a family of four with an annual household income of $90,000 in Tinley Park, Ill., feature high deductibles (Herman, Modern Healthcare, 10/26).