ACA Benefits Rates Projected to Rise

Author

Grant Ameel

​With the 2017 Open Enrollment for Obamacare--officially known as the Marketplace Insurance Exchanges – approaching quickly, there’s a great deal of speculation on how the rates will be effected this year. Early analysis suggests that the rates will spike for 2017, with some reports suggesting the increase could jump as high as 24% on average nationwide. These figures are coming primarily from insurers, who plan on participating in ACA benefits, filing early premium requests with state insurance departments in preparation for the Open Enrollment. Even though rates will vary from state to state, the early indication is that most Marketplace participants should expect at least a 10% increase from the previous year. If these projections prove to be accurate, the big question is what caused these rates to have increased so significantly? While there are surely numerous factors at play, experts have been pointing to a few glaring issues that might be the culprit for projected rate increases. 

​Perhaps the most obvious reason is that the average, marketplace enrollee tends to be less healthy and thus more costly than other types of enrollees.....

The first, and probably most obvious, is that on average Obamacare enrollees tend to be less healthy and thus more costly than other types of enrollees. A big reason for those cost increases is prior to the Affordable Care Act, insurance companies could legally deny a participant seeking personal coverage, which was common practice especially for those with           pre-existing conditions. 

With current government regulations on insurance carriers, someone with a pre-existing condition cannot be denied coverage under the ACA.  Adversely, another concern for insurers is that Obamacare hasn’t attracted nearly enough of their most desired customers: healthy young adults. Typically, since young adults don’t have nearly as many expensive healthcare issues as the elderly, their premiums are often used to offset the expenses of the more costly enrollees. Consequently, the aforementioned reasons, among others, have caused numerous insurers to redact their participation in the insurance exchanges for 2017. Multiple insurance companies have decided, that well, it’s just not worth it. Which leads to the final reason experts are predicting the 2017 rates to soar, there’s simply less insurer options to choose from this year. The bottom line is that costs have increased and competition has decreased for the Marketplace Insurance Exchanges, and thus the rates almost surely will increase.

What does that mean for COBRA?
Considering the ACA's Insurance Exchange options have been the prominent alternative to COBRA coverage since its initiation, an increase of rates for Obamacare could conversely cause a slight influx in COBRA enrollees. Even if the premiums for COBRA are slightly more expensive than a comparative insurance exchange plan, if the rate increases make the rate differences close, it would not be surprising to see even more participants opting to enroll in COBRA, seeing as how it would be a continuation of the coverage they already had. Of course it’s too early to tell if they’re will be any changes on COBRA participation, but it’s definitely something to keep an eye on, especially if coverage through healthcare.gov increases 20-25%, as some have predicted. 

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Keywords: Obamacare, ACA, 2017 open enrollment, marketplace, healthcare reform, insurance rate increases, insurance exchange rates, cobra coverage, healthcare.gov, enrollments, insurance coverage