Remember When Critics Predicted Huge Premium Increases Under Obamacare? They Were Very Wrong

CREDIT: AP Photo/Jon Elswick, File

Obama administration officials announced on Thursday that health care premiums for policies available through the Affordable Care Act will increase slightly on average in 2015, growing at a far slower rate than they did before President Barack Obama signed reform into law in 2010.

Premiums will decrease, on average, in at least 14 of the 35 states where the federal government has established a health care exchange. In the remaining 21 states, premiums will fluctuate between a two percent increase in Utah and Wisconsin to a 28 percent spike in Alaska. On average, the report concludes that premiums for the second-lowest cost policy will rise “by 2 percent on average this year before tax credits, while premiums for the lowest-cost silver plan will increase on average by 5 percent.”

Prior to reform, an analysis conducted for the Commonwealth Fund, found that on average, premiums in the individual and small group markets rose by more than 10 percent annually.

The 26-page report also notes that more than 25 percent more insurers are participating in the exchanges in 2015, meaning that “91 percent of consumers will be able to choose from 3 or more issuers—up from 74 percent in 2014.” The administration is encouraging enrollees who had signed up for coverage in 2014 to shop around this year, noting that the plans offering the lowest prices may have changed as new issuers enter the market and compete for customers. Approximately two-thirds of existing customers will be able to find coverage for $100 a month or less.

Conservative critics and Republican lawmakers quickly seized on an early Associated Press story about the findings to argue that Obama aides hid the premium increases from the public.

Administration officials — as well as independent health analysts — have long acknowledged that health care premiums will fluctuate across the country, depending on the level of insurer competition and other market factors, such as the concentration of high-priced health care providers.

“With regard to where we think premiums will be, we think, as we’ve said all along, the growth of premiums is going — in this market, which is the self-insured market, is going to be slower than it has been in the years before the Affordable Care Act,” Health and Human Services Secretary Sylvia Burwell said during an event at the Center for American Progress on Nov. 10, before enrollment began.

“In addition, we will do everything, and are doing everything to make sure that there is downward pressure on the premiums, and whether that is supporting states and state insurers, and giving them money to review those premiums that come in over 10 percent, or creating pressure to keep downward pressure on the premiums,” she added.

An analysis of available rate fillings from PricewterhouseCoopers echoes the administration’s conclusions. As of Nov. 25, it found that “among the seventeen states and DC with final rate announcements, the average premium (across metal tiers and ages) is about $361, and the average premium increase from 2014 is 3.7%. By contrast, the average premium increase across all reporting states is 5.4%, and the average premium is $389.”

On Wednesday, the Centers for Medicare and Medicaid Services reported that health inflation in 2013 fell to the lowest level since the federal government began keeping track of the statistic.