Benchmark ACA exchange premiums will rise by double digits in 2017

Photo credit: Getty/designer491

Average premiums for the benchmark silver plan on the Affordable Care Act exchanges will rise by double digits in 2017, the Obama administration said Monday.

For the second-lowest-cost silver plan on the exchanges, the benchmark plan used to calculate tax credits, premiums will increase by an average of 25 percent for 39 states using the federal marketplace, according to a report from the Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation. Factoring in four additional states from which data is available, the report estimates that the increase in the average second-lowest cost silver plan will be 22 percent next year. The median 2017 premium increase is 16 percent, the report adds.

By comparison, benchmark silver plan premiums rose an average of 7.5 percent for 2016.

Even with these increases, the report notes, 72 percent of current marketplace enrollees can find a plan for $75 or less per month in 2017, after applicable tax credits are applied, and 77 percent can find a plan for $100 or less.

Tax credits will also rise along with premiums. For example, the report says that a 27-year-old with an income of $25,000 a year will see a 62 percent increase in his or her tax credit compared to last year, making the cost of a benchmark silver plan about the same between 2016 and 2017 for that person.

An HHS report previously noted that many consumers who buy off-exchange plans may actually be eligible for subsidies if they bought coverage on the exchanges. More customers will be eligible for subsidies this year, as well; the report says 22 percent of customers who didn’t receive tax credits in 2016 may be eligible this year.

In terms of insurer participation on the exchanges--a point of concern as some payers have exited markets--the report says that 79 percent of consumers returning to the marketplace will be able to choose from two or more issuers for 2017 coverage. On average, consumers will be able to choose from 30 plans.

Still, insurer participation in the marketplaces appears to have lessened, according to a new report from the Kaiser Family Foundation that analyzes HHS data. It found that for 2017, the average number of insurers participating in the marketplace will be 3.9 in states that use from 5.4 companies per state in 2016, 5.9 in 2015 and 4.5 in 2014.

Looking at each major city in the states for which there is available data, the KFF report also shows wide variation in estimated premiums. The second-lowest silver premium for a 40-year-old non-smoker in 2017 range from $227 in Providence, Rhode Island, to $904 in Anchorage, Alaska, before tax credits are applied. But comparison, pre-tax credit premiums ranged from $186 to $719 last year.

But tax credits make a big difference; a 40-year-old adult making $30,000 per year would pay about $208 per month for the second-lowest-silver plan last year, and if he or she is willing to switch to whatever the new second lowest-cost silver plan is in 2017, the person’s premium would be nearly the same--$207.

"Consumers will be faced this year with not only big premium increases but also with a declining number of insurers participating, and that will lead to a tumultuous open enrollment period," KFF senior vice president Larry Levitt told the Associated Press.

The HHS report, though, takes a rosier view. “As the health insurance marketplace matures, new and returning customers to the marketplace will continue to be able to choose affordable, quality health insurance in 2017,” it says.