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Government to Obamacare customers: Shop more

Those who last year switched insurers, within the same level of coverage, saved an average of $41 per month, or more than $490 annually.

Current Obamacare customers on Wednesday were strongly urged to consider switching to another health plan in 2016, as a top federal health official noted that making such a move out of their current coverage can result in "significant savings."

President Barack Obama
Saul Loeb | AFP | Getty Images
President Barack Obama

That message by Health and Human Services Secretary Sylvia Burwell came just days before Sunday's start of Obamacare open enrollment, and as HHS fights to retain existing insurance customers in government-run health exchanges so as to push overall enrollment numbers higher in 2016.

It also came days after HHS released data about premium prices for 2016 that underscore the fact that returning Obamacare customers run the risk of being surprised by higher-than-expected monthly premiums if they accept automatic re-enrollment in their current plans.

Burwell cited a new report which showed that Obamacare customers who re-enrolled in the same level of health coverage last year — but who switched to a different insurance plan — saved an average of almost $33 per month in premiums, or nearly $400 annually compared to what they would have paid if they stayed in the same plan.

And those who switched "issuers," or insurers, within the same level of coverage saved even more: an average of $41 per month, or more than $490 annually.

Those savings were realized after accounting for subsidies that most Obamacare enrollees on government-run marketplaces receive to help lower the cost of their monthly premiums.

"From a consumer's perspective, it means you really need to be a smart shopper, and shouldn't be sitting idly by." -Caroline Pearson, senior vice president, Avalere Health

"Our message to returning marketplace customers is simple: Shopping may save you money," said Burwell.

During the previous open enrollment cycle, for 2015 plans, almost 30 percent of all HealthCare.gov customers switched from their 2014 plans. That plan-switching rate is significantly higher than the switch rate seen in job-based insurance, where less than 3 percent of enrollees change plan, or Medicare drug plans, where 13 percent of customers switch.

The online brokerage eHealth said Wednesday that a survey of more than 6,500 of its Obamacare customers showed that 52 percent of them say they would shop for new plans if their rates increased by $25 or more.

In the past week, HHS has been talking up the affordability of Obamacare plans and upgrades to HealthCare.gov that are designed to make it more consumer friendly. The upgrades include simplifying re-enrollment, encouraging enrollment in plans that are best suited to a given person and reducing the number of cases of people failing to provide information about their Social Security numbers or other data required to prove eligibility.

Caroline Pearson, senior vice president at the Avalere Health consultancy, said all of those moves by HHS are clearly designed to retain existing customers and attract new ones at a time when the department has said it is getting harder to draw the remaining eligible population to the exchanges. HHS now expects 10 million people to be enrolled in Obamacare plans by the end of 2016. That would mark only a modest increase over the 9.1 million people the department expects to be enrolled as of the end of this year.

"One of the primary drivers of people enrolling in this market is affordability," Pearson said. "People say if they don't think the plans are affordable, they don't want to sign up."

And "what they don't want," Pearson said of HHS, "is someone sits in a plan, the rates go up ... and people are really upset, and they get their first month's bill, and they just drop out of the market."

"From a consumer's perspective, it means you really need to be a smart shopper, and shouldn't be sitting idly by," she said.

There are two factors that can lead to sticker shock among returning Obamacare customers. One is a simple rise in the premiums of their plans over 2015 prices. The other is related to the subsidies that more than 80 percent of Obamacare customers receive.

The amount of those subsidies is strongly tied to the price of a so-called benchmark plan in their insurance market. A change in the price of the benchmark plan can affect the amount of subsidies an Obamacare customer receives, regardless of whether that person is enrolled in the benchmark plan. If a customer is enrolled in a plan that has a higher monthly premium than the benchmark plan, he or she will have to personally bear a bigger share of the bill.

Pearson said that people currently enrolled in Obamacare plans can protect themselves from sticker shock in 2016 by selecting either the benchmark plan, or one with lower premiums than the benchmark. However, Pearson also said that customers have to consider whether the lower-cost plans cover the services they get from their doctors and the prescription drugs they take.

Why the slow data release?

HHS said Monday that almost 8 out of every 10 returning Obamacare customers will be able to buy a plan that will cost them less than $100 per month in premiums after subsidies are factored in, and that 7 out of 10 existing customers will be able to buy a plan for less than $75 per month after subsidies.

Despite the fact that HealthCare.gov allowed customers to start "window shopping" for 2016 plans in their area last Sunday, and despite the fact that HHS has released information about average benchmark plan prices, the department has yet to divulge all Obamacare prices nationwide for 2016.

A spokesman for the Centers for Medicare and Medicaid Services said complete price data will be released soon, but did not say what day that would be. Last year, HHS waited until the eve of open enrollment to release those full prices.

Kev Coleman, head of research and data at the insurance comparison site HealthPocket.com, grumbled about the delay.

"I think the release of highly selective data without the release of all data allows the administration to influence the media narrative about Affordable Care Act costs," Coleman said. "It allows them to call attention to areas where positive progress is made while remaining silent on data trends that are less flattering."

When asked about why the delay was occurring, a CMS spokesman again noted that the full price list would be coming out soon.