Out-of-pocket costs for health care premiums will skyrocket in 2016, especially for low-income earners under Obamacare, according to a Wednesday report released by the National Center for Policy Analysis.
Since Obamacare tax credits are determined by enrollees’ use of the second-least expensive silver plan and their income levels, a “harmful leverage” is introduced into most consumer renewals – which could increase net premiums.
“Depending on an enrollee’s income and choice of plan in the previous year, the way tax credits are structured will actually ratchet up the out-of-pocket cost of premiums even higher than the rate increases insurers have requested,” the report reads. “Furthermore, the ratchet effect is greatest for the lowest earning enrollees, only slightly above the federal poverty level — some of them will see hikes of 50 percent or more.”
The average gross premium hike would be 7.5 percent if every enrollee who purchased the second-lowest cost silver plan last year shopped for the second-lowest cost silver plan this year, according to the Obama administration. This study, however, found just 23 percent of those who bought insurance through the exchange in 2014, switched plans by 2015.
“Because the tax credits are based on the second-lowest cost Silver plan in a rating region, the amount of the credit did not increase much from 2015 to 2016: on average, from $976 to $1,012 for an enrollee earning 250 percent of FPL and from $2,636 to $2,700 for the enrollee earning 150 percent of FPL,” it said. “If these enrollees did shop around perfectly and switched, they would be largely immunized from a premium hike.”
The report stated a minimum of six sources confirmed that increases would reach double-digits by the end of 2015 – far exceeding what the Obama administration initially projected.
A November analysis by The Daily Caller News Foundation showed rates would go up, on average, by 20.3 percent in 2016.
Freedom Partners, an Arlington, Va.-based conservative non-profit, recently released a report saying premiums in the individual market place will jump in all but one state (Mississippi) – 17 of which would see a hike of 20 percent or more.
Congress sent a bill at the beginning of January to the president’s desk designed to repeal key components of the landmark health care legislation. The commander in chief, however, vetoed it. House Speaker [crscore]Paul Ryan[/crscore] said the lower chamber will hold a vote to override the veto.
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