The dust has finally settled around this year's rate setting for health insurance premiums, including Obamacare premiums. Contrary to Republican conventional wisdom (and a ton of traditional media reports) they didn't skyrocket. At all. The increases, in fact, are pretty modest, actually. Just 4 percent over last year.
The new information comes from a report that the Department of Health and Human Services released on Tuesday. The report looks specifically at the insurance policies that consumers bought through healthcare.gov, the federally run website serving Florida, Texas, and 36 other states. The report doesn’t include people who get coverage through their employers or those who buy it directly from insurers.
Approximately 9.7 million people got insurance through healthcare.gov this year. The report divides these people into two categories: those getting federal tax credits to offset the cost of coverage, and those who do not. The tax credits are available on a sliding scale, based on annual income, and phase out completely at four times the poverty line — which in 2016 worked out to $47,520 for an individual and $97,200 for a family of four.
That’s a decent income in most parts of the country, and it’s why 85 percent of healthcare.gov consumers got at least some assistance. They are the ones who, on average, are paying just 4 percent more for their insurance than they were last year.
In most of the reporting, and all of the Republican claims of soaring premiums, those subsidies are conveniently left out of the discussion. But here's another thing—even for the people who don't get that help, premiums rose just 8 percent. That's less the average of 10 percent or more in premium increases in health plans in the decade before the law was enacted.
What's the difference between what early reports of huge premium increases and what people are actually experiencing?
More than 40 percent of returning customers shopped around, dropped the plans they had in 2015, and decided to pick new ones for 2016. While they could have done so for a variety of reasons, it’s likely that most switched in order to save money. In other words, they would have paid more, maybe a lot more, had they stuck with their 2015 coverage.
That's exactly how the law was designed to work. And that's what it appears to still be doing.