We will have a fuller picture in a few weeks when the federal government is supposed to release the premiums and plans available on heathcare.gov, which serves about 34 states, but if Minnesota is representative, there are signs that the ACA is entering a dangerous phase. That state has posted its rates for 2016 already. It’s not pretty. Gross premiums for policies sold on its Exchange will go up between 14% and 49%. Net premiums will go up more than this or less than this depending on the income of the subscriber.
The table below shows the average rate increases for 2016 among the insurance carriers selling on MNSURE, Minnesota’s health insurance exchange. The data is simply copied from its website.
The spreadsheet shown below indicates gross and net premiums for a 40 year old individual residing in Minneapolis, earning $25,000 per year and selecting a silver plan. The rate increases contained there make the simplifying assumption that each insurer applied its average rate increase to the listed plans. We don’t have actual plan-by-plan data that would enable us to provide a better estimate. Here, the net premiums assume that the individual is deemed able under to contribute about $136 per month to the premium. As one can see the the net premiums go up between 2015 and 2016 by -7% for a few of the Medica plans to up to 36% for the more expensive Blue Cross plans.
If we reduce the income of the purchaser, the net premium increases can grow. Here, we take our same 40 year old but cut his income down to $18,000. The individual is (somehow) supposed to be able to contribute about $62 a month for a policy. Now the net premiums for the silver plans swing more dramatically, going from -15% for one of the Medica plans to 61% for one of the Blue Cross plans.
Is Minnesota representative? Not entirely. It is probably at the high end of premium increases in part because its premiums were unusually low in 2015. But if other states experience rate hikes anything like Minnesota, we will see healthier individuals search out alternatives or start to be more creative about hardship exemptions in the event they decide that insurance under the ACA is just too expensive. Either way, there is beginning to be a significant risk of the exchange markets unraveling.