The New York Times reports that health insurance premiums are projected to rise a lot in 2017. Insurers are requesting large price hikes from their state insurance departments. The Obama Administration, meanwhile, is working to remind people that states review all insurer requests for premium increases and often reduce them.
What’s most concerning is that one top health plan, Geisinger, based in Pennsylvania and known for delivering value–good care at reasonable cost–anticipates medical costs will rise by 7.5 percent in 2017. And, it is requesting a 40 percent rate increase. Its CEO claims Geisinger has been losing $30 million annually on its state health insurance exchange plans.
Other health plans in Pennsylvania are also seeking large premium increases from the state, according to the Pennsylvania Insurance Department. Health plans are seeking an average premium increase of 23.6 percent in 2017.
The explanation: People in the state health insurance exchanges are needing more care than projected. And, people in relatively good health are holding on to the health plans they had before the ACA passed.
Today, millions of people can buy affordable insurance on the state exchanges thanks to government premium subsidies in the form of tax credits. They can pay as little as $900 for annual coverage ($75 a month) because of a tax credit based on their income. This year, the government is spending $110 billion on this tax credit, which helps subsidize the premiums in the state exchanges. In 2017, about 12 million people will receive these tax credits according to the Congressional Budget Office. However, another 12 million will not benefit from these credits.