Health Insurance

Many Obamacare customers will be paying more for less this year, study shows

Speaker of the House Paul Ryan, R-Wisc., quotes hikes in health insurance premiums during his weekly press conference in the Capitol on Thursday, Jan. 5, 2017.
Bill Clark | CQ Roll Call | Getty Images

For many Obamacare customers this year, they'll be paying more for less.

A new report on Obamacare plans details how plan premiums, deductibles and other out-of-pocket insurance costs have grown sharply even as the size of networks of health providers covered by those plans are shrinking in 2017.

The report from the Avalere consultancy also details how the number of insurers selling Obamacare plans have also shrunk, decreasing competition in the individual health plan market.

Last year, just 4 percent of all regions of the United States had only one participating insurer on Obamacare exchange, according to Avalere's analysis. This year, 36 percent of all regions in the U.S. will have only one participating health insurer on an Obamacare exchanges.

Avalere's report also found that in 2017, just 31 percent of all exchange-sold plans are "preferred provider organizations" or "point of service" plans, down from 52 percent of all plans in 2014, the first year of Obamacare coverage

PPOs generally have a wider networks of doctors and hospitals covered by the plan, and cover more out-of-network services than do other types of plans, including health maintenance organizations.

The report comes a week after the federal government announced that as of late December more than 11.5 million Americans have signed up for Obamacare plans nationally for 2017 coverage on either the federally run exchange, or a state-run marketplace. That tally is about 300,000 people ahead of the the pace seen at the same time last year.

Avalere's report, based on government data, found that of the 11.5 million or so enrollees, 71 percent have selected a so-called silver plan. Obamacare plans are grouped in "metal tiers," with silver plans covering on average 70 percent of their customers' health costs, with customers owing the rest out-of-pocket.

Silver plan premiums for 2017 increased by an average of 12 percent, from $496 per month last year to $554 per month this year, according to Avalere.

And premiums for the most popular types of silver plans — either the least expensive, or second-least expensive plan in a region — grew by an average of 25 percent this year, Avalere said.

The analysis did not factor in the subsidies that more than 80 percent of customers on Obamacare exchanges will get. Those subsidies, in the form of tax credits, are available to customers with low or moderate incomes.

"While many consumers will experience significant premium increases this year, most will receive subsidies to help offset the costs of the increases and make premiums more affordable," said Chris Sloan, senior manager at Avalere. Sloan noted that many customers can protect themselves from premium increases by switching to plans with "lower costs and fewer benefits."

Avalere's report found that the average deductible for health services and drugs covered by an Obamacare plan "jumped by 20 percent for silver plans in 2017 to $3,703."

A deductible is what a customer must directly pay for health services before their insurance plan starts covering the cost, with the exception of certain minimum essential health services set by Obamacare.

Avalere's report said that average deductibles for Obamacare gold and platinum plans "actually went down in 2017." Gold plans cover an average of 80 percent of customers' health costs, while platinum plans cover 90 percent of such costs.

Avalere said that the number of silver plans that impose "coinsurance" for specialty drugs, rose in 2017, from 74 percent of all such plans last year to 84 percent this year.

Coinsurance is an out-of-pocket payment imposed on consumers after their deductible is reached. If a prescription for a special drug costs $1,000, and a customer has a 30 percent coinsurance, they will have to pay $300 out of pocket for the drug after they hit their deductible.

More than half of all of silver plans charge more than 30 percent coinsurance for specialty drugs in 2017, "which is a substantial increase from 36 percent of plans in 2016."

More than half of Obamacare exchange customers, due to having lower incomes, qualify for subsidies that reduce their out-of-pocket costs, in addition to their premiums.

Obamacare's open-enrollment season ends Jan. 31. Under the Affordable Care Act, most Americans must have some type of health coverage or pay a tax penalty.

What to do about Obamacare?
What to do about Obamacare?