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Price increases for Obamacare depend on where you live

Obamacare prices are all over the map.

Two studies released Tuesday show wide geographic variation in Obamacare price increases seen this year, and in those proposed for next year. Although there are plenty of double-digit prices being proposed, that isn't the case everywhere.

The studies underscore that the amount people pay for their Obamacare plans is often strongly related to where they live. They also show how much lower the price increases can be for a customer who switches plans within the same Obamacare "tier."

And one of the studies, by the Avalere Health consultancy, also backs the widespread belief that prices for 2017 likely will rise faster than they did this year.

A person enrolls in a health insurance plan under the Affordable Care Act.
Getty Images
A person enrolls in a health insurance plan under the Affordable Care Act.

Avalere's study looked at price increases proposed for next year in eight states and the District of Columbia. The firm focused on prices of so-called "silver plans," which are the most popular type of plan sold on the government-run exchanges. Silver plans cover about 70 percent of customers' health costs.

In Vermont, the proposed 2017 premium increase for the average silver plan that covers a 50-year-old, nonsmoking male is a whopping 44 percent, going up to $685 per month, Avalere said.

The proposed price hike for a similar man and plan in Oregon, however, is 22 percent, up to $540 per month, Avalere said.

Other double-digit price hikes for that kind of plan are proposed in Virginia (19 percent), Maine (18 percent) and Maryland (18 percent).

But in New York state, the average silver plan for that man is expected to rise by just 7 percent, going up to $492 per month. In Indiana, the rate, if approved, would increase by 6 percent and in Washington state it would rise by 5 percent. And in Washington, D.C., the price would rise by 9 percent.

Avalere also looked at proposed price increases for two specific types of silver plans: the lowest-cost silver plan, and the second-lowest cost silver plan.

The first type of plan is the least expensive option available to a customer who wanted to stay in the silver tier. And the second-cheapest silver plan is a closely watched plan, because its price is used as a benchmark to determine subsidies.

"According to the data, in most states, proposed premiums for lower cost silver plans increased less dramatically or even went down for 2017, compared to higher-cost plans on the same tier," Avalere said. "Lower-cost silver plans tend to be most popular with consumers, making this portion of the market more competitive."

In Vermont, the state with the biggest average proposed silver-plan hike, the price of the average lowest-cost silver plan is proposed to grow by only 6 percent. But the cost of the second-lowest cost silver plan is proposed to grow by 10 percent.

In New York, the average lowest price silver plan is proposed to actually decrease by 29 percent, and the second-lowest cost silver plan to decrease by 25 percent.

"We conclude that a national average of premium increase is a fairly meaningless statistic, since different markets are having very different experiences." -authors of Urban Institute study

The proposed prices are just that — proposed. Rates will not be finalized until the fall, and in some cases states can exert pressure on insurers to lower their proposed price hikes.

Many analysts believe that the actual rates for 2017 will contain price hikes that are significantly steeper than the increases seen in prior years, however. The price increases will reflect not only higher medical costs, but also the fact that many plans are seeing older, sicker enrollees than they had projected. Such enrollees can cost more in terms of benefits paid than what they pay in monthly premiums.

Another big factor at play is that next year will see the end of two out of the three Obamacare programs that are designed to limit the financial risk that insurers run by selling the plans.

But Caroline Pearson, senior vice president at Avalere, said that "despite premiums rising overall, many consumers will be insulated from higher rates due to premium subsidies that limit monthly cost for many exchange enrollees."

More than 80 percent of Obamacare-exchange customers qualify for federal tax credits that reduce their monthly premiums. And more than half of such customers additionally qualify for reductions in what they personally owe in out-of-pocket medical expenses.

However, both forms of subsidies are not available to people who buy individual health plans outside of the exchanges.

"Consumers may have to switch plans in order to avoid dramatic rate increases," Pearson said, "but competitive options should still be available in most regions in the U.S."

In the other study, the Urban Institute looked at average premium increases from 2015 to 2016 across the country's Obamacare marketplaces, and found that they "were highly variable from state to state and even within states."

Like Avalere, the Urban Institute's study focused on silver plan prices. The study, which was funded by the Robert Wood Johnson Foundation, found that just over 26 percent of people live in regions that saw average premiums for the lowest-cost silver plan rise by more than 15 percent.

But a higher percentage of Americans, more than 29 percent, lived in a region where the the average premium for such plan actually declined last year.

"Another 19 percent live in rating areas with increases between 0 and 5 percent, and 16.1 percent live in areas with increases between 5 and 10 percent," according to the study.

The study noted that the range of increases spanned from a high of 41.8 percent in Oklahoma, to as low as a 12.1 percent decrease in Indiana.

"We conclude that a national average of premium increase is a fairly meaningless statistic, since different markets are having very different experiences," the authors of the study wrote.

Kathy Hempstead of the Robert Wood Johnson Foundation said that as premium rate filings for next year are announced, "We will continue to see a lot of regional variation in proposed increases."