The second open enrollment period is quickly approaching and the biggest question on everyone’s mind is – how will Obamacare premiums behave in the second year of reformed health insurance coverage? We are roughly two months away from open enrollment and any solid number on rate increase is far from available. As we approach November 15, most health plans across different states will show how premium rates will increase for 2015. However, we are currently limited to projections of how Obamacare will look like in the second year of coverage.
Since the rollout of the law, experts have maintained that Obamacare will be subject to incredible rate increases for sustaining the cost of the exchanges. However, current analysis reports that the increases are not going to dramatically increase and in some places, they might even show a decrease. Since things are not clear at the moment, let’s take a close look at how different states are going to tackle the second open enrollment period.
Before we begin with the analysis, one thing is crystal clear – health insurance premiums, on average, will cost more next year. Be it coverage through private health plans, employers or Medicare, health insurance premiums will go up as medical care costs are increasing. This has been the usual trend for health insurance, which tends to increase ever year owing to the spike in medical costs. However, in spite of Obamacare opponents saying that the premium rates would skyrocket, the available numbers are telling a completely different story.
From available data from 30 states including the District of Columbia, the average premium increase could only be 8.2 percent. The number comes from a study conducted by PriceWaterhouseCoopers, which details all available data across these 30 states and consolidates it into a single, detailed report. The 8.2 percent average figure also proclaims a solid message that premiums will increase by less of a percentage than was typical before the ACA was passed. Before the ACA, 10 percent increases were common. This, in itself, is a major win for Obamacare proponents as the law appears to be having an impact on rising costs of premiums.
In PwC’s study, there were some states for which there was insufficient data. For the remaining 29 and District of Columbia, the numbers are only indicative of what might transpire in the next enrollment period. In some places, however, the states are disputing the numbers presented by the study, and the situation might be altogether different from what the study says.. Understanding there is a some conjecture in the study, let’s look at the available numbers from the study.
From the available data, it looks like Oregon is going to take the crown of the state with the least premium increase, at -2.5 percent. Yes, Oregon might have an average drop in the insurance premium rates, with the state moving to healthcare.gov for this open enrollment period. Maine is only a little higher, at 0.1 percent average premium increase for 2015. On the positive side of increases, Delaware is showing an average increase of 1.3 percent, followed closely by Michigan at 1.6 percent. The next closest competitor could be Colorado, which is showing an increase of only 2.5 percent in average premiums in 2015. Colorado has seen a successful implementation of state run marketplace and continues to excel by limiting premium rises and keeping its 12 existing health plans and 5 new health plans well within the 5 percent limit. Mississippi and Maryland are also in the same league, with 3.8 percent and 4.3 percent as the average premium increases respectively.
Maximum other states are bordering in the 5 -15 percent bracket, with the only exception of Indiana, which could have an average increase of more than 15 percent in 2015. However, the calculation is not all that simple. Some states are maintaining that the PwC rates might never come to pass. In the second part of this series, we will take a look at the remaining states in the 5-15 percent bracket of PwC’s study, and look at the anomalies that might arise to change the percentage increase in premiums across states. Stay tuned.