The cost of the health-care plans used to calculcate Obamacare subsidies on the exchanges in 15 cities across the country is falling by an average of 0.8 percent, according to a Kaiser Family Foundation study released Friday.
The slight decreases are a double-edged sword for those actually purchasing health insurance on those 16 exchanges. The amount of premium tax credit subsidies the federal government doles out is pegged to the second-lowest cost silver plan available in that exchange. Between the three levels of health coverage — bronze, the least inclusive; silver; and gold, the cushiest plan — silver was by far the most popular during the first open enrollment period.
For a 40-year-old non-smoker making $30,000 a year, seven cities saw a decrease in their benchmark premiums, with Denver’s far and away the largest at a 15.6 percent cut. New York City’s and Cleveland’s benchmark premiums fell almost imperceptibly at 0.7 percent. Another eight cities will see benchmark premiums rise next year, from 0.8 percent in Los Angeles to 8.7 percent in Nashville.
But while premiums for the second-lowest cost silver plan are decreasing slightly on average, premiums for other health care plans are increasing in these same cities, by Kaiser’s calculations. The lowest-cost bronze option — which typically features the lowest premiums coupled with higher deductibles, for those who want some protection for emergencies or those who can’t afford a more inclusive plan — is increasing by 3.3 percent on average, the study found.
That means that in the cities studied, customers who chose the least expensive health insurance offering on the exchange will likely have to pay a larger proportion of that already-rising premium, because the benchmark plan’s rate decrease also sinks their subsidy.
Health care experts have been warning about this problem for months: with Obamacare subsidies tied to in-flux insurance offerings, it’s not a safe bet for customers to keep their same health plan on the exchange every year. Avalere Health found in June that the changing premiums of benchmark silver plans would change what’s the least expensive plan for customers in six of nine state exchanges examined.
“The impact will be more profound for lower-income consumers,” noted Avalere vice president Caroline Pearson. (RELATED: Many Obamacare Customers Will Have To Switch Plans Or Face Skyrocketing Costs)