Increase in Premiums for those Covered Under Affordable Care Act

By Winston Lie

On October 24 of this year, the Obama Administration announced a significant rise in premiums for those covered under the Affordable Health Care plan for the upcoming year in many parts of the country. This price increase will present financial strains and concerns to many of the more than 20 million adults and 3 million children currently covered by the Affordable Healthcare Act, also known as ACA.

This price increase will present financial strains and concerns to many of the more than 20 million adults and 3 million children currently covered by the Affordable Healthcare Act.

According to a report by the Department of Health and Human Services, there will be an “average increase in 2017 Benchmark Premium for HealthCare.gov States [by] 22%”; this figure was determined from preliminary data coming from 43 states and the District of Columbia. Although the national average of these increases may hover around 22% which may seem relatively small, there will be huge variations in markups according to the region of the country the individual lives in.

In an analysis by the Kaiser Family Foundation Group, a 40-year-old, non-smoking individual living in Phoenix, Arizona who makes $30,000 per year and receives financial assistance will expect to pay $507 in 2017 in comparison to only $207 in 2016. In short, in contrast to the national average of 22% increase, this man will experience a 145% increase. Meanwhile, an individual with the same conditions but residing in Richmond, Virginia can expect only a 7% increase in costs.

Many factors can be attributed to the rising premiums cost. The New York Times noted that many of insurers that partnered with the ACA “mispriced their plans in the early years of the law and have either left the market or had to raise their prices sharply to cover the costs of providing coverage.” Many of the services covered by insurers before the ratification of the ACA are simply too expensive for the premiums to remain as low as they had been. In response to this discrepancy between market costs and government-mandated premium prices, UnitedHealth, Aetna, and even more insurance companies have left their partnership with the Affordable Care Act.

Though these increases are sharp, they will primarily affect individuals who buy their own health insurance. Those whose health insurance is often provided by and managed by employers will not be as affected as those who purchase their own insurance. However, for those who do buy their own insurance there are some actions that can be taken in order to offset any large changes in premium costs. One option would be to research for other health plans that offer similar coverage at a reduced cost on the healthcare marketplace. Another possibility may be to apply for subsidies and other financial assistance to minimize the extra costs, which the Obama administration has encouraged.

Regardless of whether one’s insurance is covered under the Affordable Health Care or not, the increase in health care premiums nonetheless is problematic and reveals issues with the competitive and expensive nature of the healthcare market in the United States, especially for the families and individuals within the middle or low income range. Therefore, it is necessary for the full implications of the ACA be studied in order to alleviate more suffering of American citizens.

 

Citations

Abelson, Reed, and Margot Sanger-katz. “A Quick Guide to Rising Obamacare Rates.” The New  York Times, The New York Times, 25 Oct. 2016, www.nytimes.com/2016/10/26/upshot/rising-obamacare-rates-what-you-need-to-know.html.

Cox, Cynthia et al. “2017 Premium Changes and Insurer Participation in the Affordable Care Act’s Health Insurance Marketplaces.” 2017 Premium Changes and Insurer Participation in the Affordable Care Act’s Health Insurance Marketplaces, Kaiser Family Foundation, 1 Nov. 2016, kff.org/health-reform/issue-brief/2017-premium-changes-and-insurer-participation-in-the-affordable-care-acts-health-insurance-marketplaces/.

Marte, Jonelle. “Where Obamacare Prices Are Rising Dramatically.” Washington Post, The Washington Post, 1 Nov. 2016, www.washingtonpost.com/news/get-there/wp/2016/11/01/where-obamacare-prices-are-rising-dramatically/.

Pear, Robert. “Some Health Plan Costs to Increase by an Average of 25 Percent, U.S. Says.” The New York Times, The New York Times, 24 Oct. 2016, www.nytimes.com/2016/10/25/us/some-health-plan-costs-to-increase-by-an-average-of-25-percent-us-says.html.

Pignataro, Juliana Rose. “How To Apply For Obamacare: Open Enrollment Deadlines, Dates And What To Know Before Signing Up For A Plan.” International Business Times, 27 Oct. 2016, http://www.ibtimes.com/how-apply-obamacare-open-enrollment-deadlines-dates-what-know-signing-plan-2438263

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