McKinsey analysis: ACA premiums to trend upward in 2017

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Premiums for all tiers of ACA exchange products, from ‘catastrophic’ to ‘platinum’ will increase at greater rates than in either of the two previous years.

An analysis from McKinsey & Company shows national carriers have requested the highest rate hikes with state regulators, seeking an average increase of 27 percent for the lowest-price silver plan.

The consulting firm adds that consumers who are eligible for subsidies on ACA exchanges should expect to see low changes in net premiums, thanks to the cushion that subsidies provide.

McKinsey’s analysis seems to at least partially confirm the claims in a white paper from the Department of Health and Human Service that most consumers will still be able to get relatively inexpensive coverage.

Some 28 percent of consumers may see a net premium decrease, according to the report.

Of the 18 states in the study, Tennessee, Oregon, Colorado, Connecticut, Minnesota and the District of Columbia were the only ones to approve rate hikes of 10 percent or greater on average.

Premiums will increase five percent or less in California, Pennsylvania, Indiana, Idaho, Nevada, Vermont and Washington state. Premiums on individual exchange products are set to fall nine percent in Rhode Island, the report says.

The sunset of the government’s reinsurance and risk corridor programs, along with underpricing plans in previous years, factor into the 2017 rate increases.

“The factors that are driving premiums to increase in 2017 are one-time factors,” Cynthia Cox of the Kaiser Family Foundation told the New York Times. Premium trends in the future will depend on the number of enrollees signing up, Cox added.