Most Americans won't be affected by Obamacare premium increase

Health care may pinch a little more out of your wallet in 2017- but it likely won't be a problem for the majority of Americans.

Obamacare health plan premiums are expected to increase by 22 percent on average, according a U.S. Department of Human Health and Services (HHS) report released Monday.

The report also found a decrease in insurance issuers from 298 in 2016, to 228 in 2017, making it a less competitive market.

But for many, the price hikes will be relieved by federal subsidies, since 84 percent of Obamacare purchases receive financial aid, according to the report.

The marketplace also offers tax credits for majority of people who enroll in Obamacare, which also helps cover premium costs so many under the Affordable Health Care Act (ACA) will see minimal rate increases.

Who should be worried about a premium increase?

It's important to note, only a small percentage of Americans use health insurance plans provided by the 2010 ACA. 

HHS states, 20 million people have enrolled in Obamacare since 2010, but there are about 319 million people in the U.S.

This means, less than seven percent of Americans use Obamacare. The rest of the U.S. population is covered by their employer, Medicaid or Medi-Cal or by the U.S. Department of Veteran Affairs.

The HHS report encourages those who could be looking at price increases, to shop around for a new plan for 2017. The average premium in 2017 is expected to be about $28 less on average after tax credits, than in 2016- a 20 percent reduction. Staying on the same plan could mean an increase in price.

What does this mean for California?

California's state health insurance marketplace, Covered California, announced in July, a double-digit increase of 13.2 percent for 2017.

However, the federal report price increases are unrelated to the numbers reported by Covered California.

The HHS report was based upon the example of a 27-year-old using the second-lowest silver benchmark plan- which is the most popular plan. Covered California looked at all plans statewide to come up with their data, according to Dana Howard, spokesperson for Covered California.

Using the same method as HHS, those insured under Covered California would see a 7 percent increase- not a 22 percent increase, Howard said.

California is home to about 39 million people and Covered California has insured about 2.5 million people living in the Golden State since 2014. That's less than 7 percent of the population.

The primary reason for the premium rate increases in California is the end of the ACA's reinsurance program, a program that subsidized health care plans that enrolled higher-cost individuals. The program was designed to keep health care costs down for the first three years to attract customers and stabilize the market, according to Covered California rate booklet.

The reinsurance program aimed to protect insurance companies who would have to service individuals they would not have previously covered before the ACA came into place. It was created in order for companies to adjust.

But now, the 'guardrails' are off, according to Howard- meaning insurance providers have to charge more to make up for the removal of the subsidies. 

"It's a one time adjustment," Howard said. 

Premium increases will vary for those under Covered California depending on region.

The average premium in Northern California is $453, while in Southern California, it's $346. There are 19 pricing regions in the state.

There will be a total of eleven health insurance companies under Covered California in 2017, but each region will have different availability. However, there will be at least three companies to choose from for each region, according to Covered California.

Residents in the greater Sacramento region will have five companies to choose from, including Anthem, Blue Shield, and Kaiser Permanente although some companies will only cover partial regions.

About 91% of individuals in the Sacramento region using Covered California received financial aid for their premiums.

Covered California sets the Sacramento's rate change for 2017 at 13.4 percent- slightly higher than the state change. Bit it likely won't reach a high rate change for most individuals after shopping for cheaper plans and applying subsidies and tax credits, according to Howard.

"Sacramento is going to be pretty stable," Howard said.

For other regions, it may be not be the same deal.

"In some limited geographic areas, the cost of care is higher," Howard said. "San Francisco, the Bay Area and the Peninsula, their hospitals and doctors cost a lot of money and choices are limited." Howard said.

Santa Cruz and Monterey are expected to see premium rate increases by nearly 29 percent.

But as premium rates increase, so will federal subsidies to help balance the costs, Howard explained.

Individuals that will be most impacted by price increases are those who are unsubsidized, because their income is too high to receive federal assistance, according to Howard.

Howard said, people who face steep price increases should shop around for other plans in the same metal tier, or even go off the exchange to look at other options.

Eighty percent of people who see an increase in their premium can reduce their current rate or limit their rate to less than five percent if they shop around and switch to the lowest-cost plan at their same benefit level, according to Covered California.

Health care costs go beyond Obamacare.

"Health care costs are a national debate," Howard said.

The cost of employer-provided insurance is also going up, according to Howard.

Part of the problem is California doesn't require insurance companies to lower premiums, according to Carmen Balber, the executive director of Consumer Watchdog, a nonprofit consumer advocacy organization.

"Insurance companies like to blame everyone but themselves," Balber said. "There are many things they can change."

Consumer Watchdog was behind Proposition 45, a measure on the November 2014 ballot which would have required public notice for health insurance rate changes, so price increases would have to be justified by the state.

Although Prop 45 didn't pass, Consumer Watchdog is now backing Proposition 61, which will be seen the upcoming November ballot. Prop 61 aims to regulate drug prices in California by reducing the costs paid by the state.

Drug price increases have made headlines recently. 

"You saw it in the EpiPen," Balber said.

The average wholesale price for the life-saving allergy shot increased by 500 percent since 2009, putting drug maker Mylan under fire from the public. There's no generic equivalent or no-brand competitor.

"We've got 17 measures on the ballot this year," Balber said. 

Fourteen of the 17 measures are citizen initiatives.

"This shows consumers are worried," Balber said.

Open enrollment for Obamacare 2017 begins Nov 1st. The last day to enroll or change plans for coverage to start by Jan. 1, 2017, is Dec. 15, 2016.

Copyright 2016 KXTV


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