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Many Americans purchasing Obamacare-compliant health insurance plans will pay significantly higher premiums next year for coverage that generally carries large deductibles and has narrow provider networks. The high premium and high deductible combination likely contributed to the administration’s decision to wait until just before open enrollment, and after election day, to publicize the rates. These premium increases are on top of last year’s average increase of nearly 50 percent for individual market coverage.

Independent analysts have found that premiums for Obamacare’s benchmark plans will increase by an average of nearly four percent next year. In more than one-fifth of health insurance market areas, premiums for benchmark plans – the second-lowest price silver plan in each market – will rise by more than 10 percent. Benchmark premiums in some areas of Alaska, Iowa, Michigan, and Ohio will be about 30 percent higher than in 2014. These benchmarks are important because exchange subsidies are pegged to them. People will see their subsidy shrink if benchmark premiums decline relative to their plan premium.

Average Increase in “Benchmark” Plans

Source: American Action Forum

The average increase in benchmark premiums understates the rate hike that many exchange enrollees will face. Rates for some of the most popular plans last year, some of which were benchmark plans, will rise much more than four percent. Blue Cross Blue Shield in North Carolina, which now has nearly 75 percent of the state’s exchange enrollees, is increasing premiums an average of 13.5 percent, on top of average increases of 136 percent last year in the state. Florida Blue, which has a large market share, is increasing premiums by an average of 17.6 percent next year. The Wall Street Journal reported on June 18, before final rates were released, that the largest health insurer in nine out of 10 states proposed to increase premiums between 8.5 percent and 22.8 percent for next year.

The price of the cheapest exchange plans is increasing next year as well. Investor’s Business Daily analyzed rates in the largest city in 34 states for a 27-year old earning 250 percent of the poverty level. It found premiums going up seven percent for the lowest-cost bronze plans, nine percent for the lowest-cost silver plans, and 18 percent for the cheapest catastrophic plans. In 11 of the 34 cities, the subsidized, lowest-cost bronze premium will rise by double digits.  

Broken Democrat Promises

In selling Obamacare, Democrats repeatedly promised it would reduce premiums for the average family by $2,500 a year. Contrary to these promises, health insurance premiums have increased significantly since Obamacare became law. Between 2009 and 2014, the average family premium for employer-sponsored coverage rose by nearly $3,500 – from $13,375 to $16,834 – even as deductibles and cost-sharing increased as well. The percentage of workers whose insurance carries an annual deductible exceeding $1,000 has nearly doubled since 2009.

Premiums in the individual market increased an average of 49 percent in 2014, largely because that’s when the bulk of Obamacare’s mandates and regulations took effect. Because the law transfers money from the young and healthy to the old and sick, premiums increased the most for young people – up an average of 75 percent for young men and 40 percent for young women between 2013 and 2014.

These increased premiums are for insurance that has higher deductibles and cost-sharing than before, and that is accepted by far fewer doctors and hospitals. CBO expects that Obamacare plans “will not be able to sustain provider payment rates that are as low or networks that are as narrow” in the future.

Obamacare’s premiums would be even higher if not for the law’s reinsurance program and risk corridor program. These programs provide large subsidies for exchange enrollees and insurance companies, financed by higher health insurance premiums and taxes on most Americans. Obamacare’s reinsurance program provides a $20 billion subsidy over the next three years to cover the majority of the cost of high-claim enrollees in the individual market. The reinsurance program lowers exchange premiums by more than 10 percent, according to one insurance market expert. Obamacare’s risk corridor program provides further protection for insurers participating in the exchanges by forcing taxpayers to bail out insurance companies that lose money on Obamacare plans. Insurers have said that they expect about a $1 billion taxpayer bailout for losses incurred in 2014.