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Obamacare: You can pay less, but need to shop around

HealthCare
HealthCare.gov

There will be more than a few "silver" linings in Obamacare's 2015 prices.

When customers start shopping for the most popular plans on health-care marketplaces next week, they'll be more likely than not to see only modest increases—or even cuts—in prices on the cheapest plans being offered by insurers, a new report said Thursday.

According to the Urban Institute, insurers that are scrambling to retain existing customers—and get new ones—are keeping a lid on prices of the least-expensive "silver plans."

Silver plans are as a rule the second least-expensive types of plans sold on the insurance exchanges, and cover about 70 percent of health benefits, on average.

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"There's a good deal of competition out there, and it really is holding down rate increases," said report co-author Linda Blumberg, a senior fellow at the Urban Institute, which conducted the study with funding from the Robert Wood Johnson Foundation. "You really see the competitive dynamics at work here."

"It's a real positive for customers," she said.

Still, the report underscored a looming concern for Obamacare's open enrollment.

For the first time, most existing Obamacare customers will be automatically re-enrolled in their existing health plans, unless they change their selection.

But some of lowest-priced silver plans in 2015 will be different from those that had that distinction in 2014. In other words, if customers want to stay with the cheapest option in a given market, some will need to switch plans.

The Urban Institute report looked at insurance rating areas in the District of Columbia and 17 states that have finalized prices on 2015 health plans. They will be sold through HealthCare.gov beginning Nov. 15.

Specifically, the report eyed the prices of the least expensive silver plan option offered by insurance carriers in each of those states. Nearly two-thirds of enrollees selected a silver plan in 2014.

The Urban Institute found six states will have average premium reductions across the insurance carriers' lowest-cost silver plans.

Another 10 states will see "small" average premium price increases, defined as a 5 percent gain or less.

Just two states are seeing increases of greater than 5 percent in the average premiums across the carriers' lowest-priced silver plans—Tennessee and West Virginia—the Urban Institute report found.

A separate report by PricewaterhouseCoopers noted that in more than 40 states, the average proposed premium price increase is 6 percent.

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The Urban Institute's report noted many of the price cuts or small hikes in premiums for the lowest-cost silver plans are being seen in large cities, including Baltimore, Cincinnati, Cleveland, Denver and Detroit.

On the other hand, bigger premium hikes are seen in rural areas. One example is BlueCross Blue Shield of Tennesee's lowest-priced silver plan for 16 rural counties in the middle-southern part of that state, which is jumping by 19.9 percent, from $216 to $259 per month.

Blumberg said both of those findings reflect the effect of competition, as well as the overall health of the populations.

Rural areas typically have less competition among health-care providers, meaning that insurers have less leverage in price negotiations with them, Blumberg said. Rural areas also tend to have less healthy populations than urban locations, she said.

Blumberg also noted that while the price increases of some of Tennessee's silver plans may seem eye-popping, the state had some of the lowest silver plan prices in the nation for 2014. The level of premiums for 2015 remain low relative to those across the nation.

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The Urban Institute report did not factor in the effect of federal subsidies on what people end up paying for their insurance. About 85 percent of Obamacare enrollees get financial aid to pay for their monthly premiums.

Blumberg said that all Obamacare customers, including new enrollees for 2015, should carefully examine their plan options, and not automatically accept re-enrollment.

"I think it is in every consumer's interest," she said. "You just don't want to go blindly buy something when you haven't seen the array of prices and options that are out there for you."