Health Insurance Rates

Consumers could be hit with major price increases, without even knowing it, if they don’t switch their health care plans.

National Journal

By Sam Baker
August 5, 2014

If you like your Obamacare plan, you can keep it—but you might end up paying a whole lot more.

People who decide to stick with the coverage they’ve already gotten through Obamacare, rather than switching plans, are at risk for some of the biggest premium spikes anywhere in the system. And some people won’t even know their costs went up until they get a bill from the IRS.

Insurance plans generally raise their premiums every year, but those costs are just the tip of the iceberg for millions of Obamacare enrollees. A series of other, largely invisible factors will also push up many consumers’ premiums.

In some cases, even if an insurance company doesn’t raise its rates at all, its customers could still end up owing thousands of dollars more for their premiums. It’s all a byproduct of complicated technical changes triggered, ironically enough, by the law’s success at bolstering competition among insurers.

Many consumers will need to switch plans in order to keep their costs steady, but health care experts question how many people will do that. Switching plans can entail changing your doctor and adjusting to new out-of-pocket costs, never mind the fresh trek through HealthCare.gov. The White House has already set up an auto-renewal process, making it easier to stick with the status quo.

And with so many behind-the-scenes factors at play, most people might not even know that they need to go back through HealthCare.gov just to keep the deal they already have.

“A lot of people aren’t going to understand this,” said Susan Pantely, an actuary at the Milliman consulting firm.

Hidden cost of doing nothing

Let’s break down the complex factors that make inertia so expensive for Obamacare enrollees.

First, there are the standard premium increases insurers seek from year to year. The lowest-cost plans in each state’s marketplace were generally the ones that attracted the most customers in 2014. But in many cases, they’re also the plans seeking above-average rate hikes.

“The prices of the lowest-cost [plans] tend to be going up more,” said Caroline Pearson, vice president at the consulting firm Avalere Health. “Most people, if re-enrolled, will be enrolled in a plan that has a premium increase.”

But that’s only part of the reason inertia is so expensive for Obamacare enrollees. The vast majority of enrollees don’t pay the full cost of their premiums—85 percent are getting financial help from the government. And many of those consumers will find that their subsidies don’t go as far next year, even for the same plans.

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