HHS Attempts to Assuage Fears Regarding 2017 Premiums for ACA Plans

As health insurers reduce their involvement in the Affordable Care Act (ACA)’s insurance exchanges and states approve sharp premium increases for 2017, HHS is trying to assuage fears that coverage under the ACA will be unaffordable for consumers next year.

According to an analysis from HHS, consumers will still be able to find affordable coverage options even with large premium increases. The agency analyzed a hypothetical scenario where all insurance premium rates increased by 25% and found that 73% of consumers would still be able to purchase coverage for less than $75 a month.

HHS attributes this possibility to the fact that premiums and healthcare prices have grown at the lowest rate in 50 years since the implementation of the ACA.

“Headline rate increases do not reflect what consumers actually pay,” Kathryn Martin, acting assistant secretary for planning and evaluation at HHS, said in a statement. “Our study shows that, even in a scenario where all plans saw double digit rate increases, the vast majority of consumers would continue to have affordable options.”

Tennessee’s Affordable Care Act health insurance exchange close to collapse, the state’s insurance regulator has signed off on high premium hikes to prevent another insurer from pulling back involvement.

The Tennessean reported that the state had signed off on all the premium increases requested, the largest being BlueCross BlueShield of Tennessee’s 62% average increase.

HHS is touting 2 features of the ACA marketplace that are in place to protect consumers from large premium increases like those that consumers in Tennessee are facing. First, tax credits increase along with premiums. Tax credits increase by the amount that the second-lowest-cost silver plan increases. Second, consumers will still be able to shop around. However, BlueCross BlueShield of Tennessee is the only insurer to sell plans statewide. So while consumers will have multiple plans to choose from, they might all be from the same insurer.

All ACA marketplace premiums will be finalized and public in October.

Meanwhile, the Congressional Budget Office is expecting some of the pressures driving rates up to dissipate after 2017. This year marked the end of the ACA's temporary reinsurance program, which has put upward pressure on 2017 rate increases. However, that force will not be an issue in 2018 and beyond. In addition, some insurers priced below cost for 2014 because it was a new market and there was a lot of uncertainty. As a result, insurers have been making adjustments to bring premiums in line with observed costs.

The latter issue has played a big role leading up to the current high premium increases in Tennessee. Governor Bill Haslam told The Tennessean that the state has had some of the lowest premiums in the ACA marketplace despite having some of the sickest citizens.