AgileHealthInsurance Report | 2015-09-02
Obamacare plans have often been criticized for their expensive prices and narrow provider networks. A recent survey found that less than a third of enrollees on the Obamacare exchanges were satisfied with their current plan. The most commonly reported reason for dissatisfaction was price, with 35 percent of dissatisfied Obamacare exchange enrollees feeling that they paid too much for their plan1. Among Obamacare exchange enrollees that switched plans between 2014 and 2015, 40 percent switched to get a lower price.2
Premiums for Obamacare plans are expected to increase substantially in 2016, with many insurers requesting double-digit rate hikes. For example, in June Blue Cross and Blue Shield of North Carolina proposed an overall rate hike of 26 percent for 2016 Obamacare plans, and two months later raised the hike to 35 percent3. Proposed rate hikes have to be approved before they go into effect.
In order to determine the prevalence of double-digit proposed rate hikes, AgileHealthInsurance calculated the percentage of each state’s Obamacare marketplace products that had a double-digit rate hike proposed for 2016. Obamacare products are collections of plans from the same insurer, and the overall rate hike for a product is the enrollment-weighted average of the rate hikes for its plans. Rate hikes were analyzed for products on the federal Obamacare exchange.
Overall, 31 percent of Obamacare individual marketplace products had a double-digit rate hike proposed for 2016. Fourteen percent of Obamacare products on the federal exchange had a proposed rate hike of at least 20 percent, while 7 percent of products had a proposed rate hike of at least 30 percent.
Double-digit proposed rate hikes were the norm in several states that used the federal Obamacare exchange. All Obamacare individual products on the exchange in Delaware, South Dakota, and West Virginia had double-digit proposed rate hikes for 2016.
In most states, a majority of Obamacare products did not have double-digit proposed rate hikes. Arkansas, Maine, and Mississippi had no Obamacare products with double-digit proposed rate hikes.
There were some states where most Obamacare products had proposed rate hikes of 20 percent or higher. In Montana, Delaware, and West Virginia, a majority of Obamacare products had 20 percent or higher proposed rate hikes.
Fourteen states on the federal Obamacare exchange did not have any products with proposed rate hikes of 20 percent or higher, and 23 states did not have any products with proposed rate hikes of 30 percent or higher. However, over 30 percent of Obamacare products in Montana, Alabama, and New Hampshire had proposed rate hikes of 30 percent or higher.
|State||Percentage of Obamacare products with double digit rate hike||Percentage of Obamacare products with 20% rate hike||Percentage of Obamacare products with 30% rate hike|
|All States Using Federal Exchange||31.14%||13.62%||7.04%|
In addition to investigating the percentage of double-digit rate hikes, AgileHealthInsurance also determined which states on the federal exchange had the products with the largest rate hikes. Alabama had the product with the largest proposed rate hike of 71 percent. New Mexico, Pennsylvania, and New Hampshire also had products with proposed rate hikes over 50 percent.
Term health insurance is an inexpensive alternative for consumers that are dissatisfied with Obamacare because of the price. AgileHealthInsurance found that term insurance premiums for 30-year-olds were over 70 percent less expensive on average than premiums for the cheapest Obamacare metal plans4. Per month, term insurance plans were about $200 cheaper. Term health insurance premiums were over 65 percent less expensive for 40-year-olds and over 55 percent less expensive for 50-year-olds than premiums for the cheapest Obamacare metal plans.
Term insurance plans have enrollment throughout the year, so consumers can sign up for a plan at any time. If consumers cannot get an Obamacare plan because the annual enrollment period for Obamacare is over, they can still get a term insurance plan. If a consumer has an Obamacare plan and is dissatisfied with its price, then they may be able to get a similar term insurance plan for a fraction of the price.
Since price was the most commonly reported cause of dissatisfaction with Obamacare plans, consumers are likely to be even more dissatisfied in 2016. On the federal exchange, 31 percent of Obamacare products have proposed rate hikes in the double digits. In ten states, at least half of Obamacare products have proposed rate hikes in the double digits.
Obamacare rates for 2016 are still not finalized, and final rate hikes may be lower than the proposed rate hikes. Regardless of the final hikes, term insurance premiums will be a fraction of the price of Obamacare premiums. Consumers that do not qualify for Obamacare subsidies or cannot buy an Obamacare plan outside the annual enrollment period should remember that they can buy a term health insurance plan at any time.
Double-digit proposed rate hikes for 2016 Obamacare products were collected from ratereview.healthcare.gov. Proposed rate hikes were collected for products that included metal plans in states that use the federal Obamacare exchange at healthcare.gov. 2015 Obamacare products without double-digit rate hikes were identified using the 2015 QHP individual market medical landscape files for qualified health plans in the federally-facilitated marketplace states, as well as Nevada, New Mexico, and Oregon.
A product is a collection of plans from the same insurer. Products may contain plans with different metal levels. The overall rate hike of the product is the enrollment-weighted average of the rate hikes of its plans. In this study, rate hikes were compared for products and not for plans.
The number of Obamacare products in each state’s marketplace in 2015 was counted from the 2015 QHP landscape files. The number of products with double digit proposed rate hikes that were on the 2015 marketplace in each state was counted using ratereview.healthcare.gov and the 2015 QHP landscape files. The percentage of products with a double-digit proposed rate hike was calculated by dividing the second number by the first number. For example in Illinois, there were 37 Obamacare products that included metal plans from the 2015 QHP landscape file and 8 of those products with double digit proposed rate hikes from both the 2015 QHP landscape files and ratereview.healthcare.gov. Therefore 8 / 37 = 21.62 percent of Obamacare products on the exchange in Illinois had double-digit proposed rate hikes.