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Many Predictions for 2016 Insurance Premiums Were Overestimated

Study shows 4.3 percent average increase in lowest-cost silver plans from 2015 to 2016
November 24, 2015

New research counters many earlier predictions of widespread double-digit premium rate increases for consumers purchasing health insurance in the state marketplaces this fall. Contrary to previous reports which included proposed rates, researchers at the Urban Institute analyzed final approved rates and found a 4.3 percent increase in the average premium of the lowest-cost silver plan across 20 states and D.C. The report, prepared with funding from the Robert Wood Johnson Foundation, analyzes the difference in 2015 vs. 2016 premiums and provides detailed information for each insurer participating in the marketplaces studied. 

 

While the average cost increase is modest, researchers found a wide variance, both among the states and within state rating regions. The average premium of the lowest-cost silver plan decreased in six states and D.C. It increased by less than 5 percent in five states, increased between 5 and 10 percent in five states, and increased by more than 10 percent in four states. The report offers further breakdowns—across a total of 63 state regions—to better illustrate local changes in the marketplaces and plans offered to consumers.    

 

The researchers observed that regions with lower 2015 premiums tended to see larger cost increases in 2016 than states that began with higher 2015 baseline premiums. They suggest that many insurers may have priced aggressively early on in order to gain market share, then modified that strategy this year. The report forecasts that it will take a few more years for insurance risk pools and premiums to stabilize.     

 

"Premiums are the most important factor for the exchange customer," said Kathy Hempstead, who directs coverage issues at the Robert Wood Johnson Foundation. "While rates have not increased significantly in all markets, plans have changed in other ways, so consumers should shop carefully."

 

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