Some ObamaCare Premium Increases will be Over $1,000 Annually

Washington, D.C. – Consumers who in 2015 keep the same plans they purchased for 2014 on the ObamaCare exchanges could be in for a big shock, warns Dr. David Hogberg, senior fellow at the National Center for Public Policy Research.

“Because of the way the subsidy mechanism works, some consumers could see an exorbitant increase in premiums,” Hogberg said. “For example, a 27-year-old single person in Denver, Colorado making $25,000 annually who bought the cheapest bronze plan will pay $535 more this year. A 57-year-old couple in Miami, Florida earning $50,000 annually who did the same will pay $1,548 more.

The worst area is Jackson, Mississippi, where a 27-year-old earning $25,000 who keeps the cheapest bronze plan will pay $1,168 more and a 57-year-old couple earning $50,000 will pay $3,282 more.

In the study, “Three Ways Consumers Could Pay Exorbitantly Higher Premiums on the ObamaCare Exchanges in 2015,” Hogberg explains how this can happen.

To see how an area in your state fared, see Tables 5 and 6 near the end of the study.

“The subsidy is based, in part, on the second-lowest cost silver plan on the exchange and when the price of that plan drops, so will the subsidy,” Hogberg says. “Consumers in those exchanges are the most at risk, but even consumers on exchanges where the second-lowest cost silver plan increases, thereby increasing the subsidy, are not necessarily safe from substantial premium increases.”

First, consumers who qualified for a subsidy in 2014 will see their subsidy decline in 2015 if they are on an exchange in which the price of the second-lowest cost silver plan declines. If they also have a policy that has increased in price, then they will pay higher premiums. That is what happened in Jackson, Mississippi where, for a 27-year-old, the subsidy dropped by $83 per month and the cheapest bronze plan rose by $14 a per month. That resulted in a monthly premium increase of $97, or about $1,168 annually.

Second, consumers on an exchange in which the price of the second-lowest cost silver plan declined could pay higher premiums if they had a policy that decreased in price but did not decrease as much as the price of the second-lowest cost silver plan. That happened in New Hampshire. For a 57-year-old couple, the subsidy declined $163 per month while the bronze plan dropped $11 per month, resulting in a premium increase of $152 per month, or $1,824 annually.

Finally, it is even possible for consumers to pay higher premiums on an exchange in which the subsidies increased. Consumers on those exchanges who own a policy that increases more than the subsidy will pay higher premiums. In Miami, Florida, a 57-year-old couple with the cheapest bronze plan in 2014 saw a monthly premium increase of $129 ($1,548 annually) because the subsidy increased $18 per month but the cheapest bronze plan rose $147 per month.

“Consumers facing such increases will either have to find room in their budgets or deal with the hassle of changing insurance plans,” says Hogberg. “And, as the study also shows, switching plans is no guarantee that a consumer won’t still pay more than he or she did last year.”

The National Center for Public Policy Research, founded in 1982, is a non- partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations, and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

Contributions to the National Center are tax-deductible and greatly appreciated.