Get ready for big increases in premiums under the Affordable Care Act. A new analysis from the Kaiser Family Foundation examined the most popular individual plans under the new health care law in 14 major cities around the country and found that insurers were asking for increases in 2017 that are twice as big as this year’s. There is wide variation, including some places where rates will go down, but the average requested increase is 10 percent.  While it will be months before insurers and regulators agree to final rates for the coming year, the Kaiser analysis confirms the signals we have seen from industry and government experts — that consumers and the federal government are likely to see much higher prices in many markets. Clearly, insurers are struggling to figure out how much to charge so they can cover their costs but still attract customers.  As health care reporters, we’ve been debating exactly how worried one should be about the fate of the Affordable Care Act, known informally as Obamacare, in the face of steep rate increases next year.  Reed: Margot, you were definitely right to sound the alarm last month. While it’s still early — and we don’t know what regulators are likely to do with the proposals they’re getting — the Kaiser analysis seems to me another sign that we’re a long way from having a stable individual market. Kaiser was looking at major cities, after all, where there is supposed to be plenty of competition and the market is supposed to work the best. But in our hometowns, New York City and Washington, the proposed rate increases were among the highest — 16 percent for each market!  Margot: Seriously! D.C. likes to brag about how it has the highest enrollment rate and the youngest, healthiest risk pool in the country. But it seems clear that even the insurers here are struggling. I think these higher rates should remind us that this new market has proved much harder for insurers to figure out than we might expect three years in.  I think the news in some rural areas could be even worse. Those are the places where there’s far less competition among insurers and hospitals. Charles Gaba, a blogger who closely tracks enrollment and insurer filings, has published a weighted-average rate increase for the states with numbers, and that one is way higher than Kaiser — 22 percent. There are reasons his methodology will produce higher numbers than Kaiser, but he’s finding much bigger increases than he did last year using the same method.  Reed: The prices are also concerning, even if the federal government ends up paying most of the bill. In New York and Vermont, a cheap silver plan, before taking into account subsidies, could end up costing more than $400 a month, according to the Kaiser estimates. In about half of the cities, somebody has to pay at least $300. That’s steep.  Margot: I feel obliged to jump in and say that most people aren’t paying those sticker prices now and won’t next year, either. The federal subsidies protect low-income folks from the brunt of the increases. But people earning higher incomes are definitely going to feel these prices.  Reed: The question I have is whether this is a one-time adjustment or whether we are likely to see these kinds of rate increases in future years. What do you think?  Margot: I don’t see any signs that the market is spiraling out of control. I think the insurers just underpriced to start, because of some combination of bad estimates, unexpected regulatory changes and perhaps unwise loss-leader strategies. Assuming they have better numbers to work with now and a firmer sense of the regulatory landscape, it seems reasonable to think this might be a one-time market correction.  Still, the increases look so high. What’s the pessimistic case here?  Reed: For the insurers, it’s that this group of people is sicker and costlier to cover than they bargained for. Unless the companies figure out how to manage those costs and keep premiums stable, the people sitting on the sidelines — individuals who haven’t enrolled or even employers deciding whether to send workers to the exchange — will do their best to stay out of the market. Even if there’s no so-called death spiral, the law doesn’t succeed in providing coverage to the tens of millions who remain uninsured.  Margot: Well, I think we definitely need to adjust our expectations of who these marketplaces are primarily for. When the law was being debated, the common enrollee envisioned was an upper-middle-class person who ran her own business and wanted to be able to buy something like employer coverage. That’s not this market. But a lot of the eligible but unenrolled people are still very low-income and are effectively insulated from the price increases. I think there’s room to grow here, and if you look at the surveys of people in this market, the customers are largely happy. Obviously, that’s not everyone. But I think having this health insurance option that didn’t exist before is still really welcoming for a lot of low-income people who used to slip between the cracks.  Reed: And here’s where I may be at least somewhat optimistic. While I won’t begin to predict what will happen in the coming elections, I think it’s possible that lawmakers could become more pragmatic. In states like Alaska, where the law doesn’t seem to be working, at least there’s some conversation taking place about what to do. And federal officials have made it harder for plans to sell so-called short-term policies that siphon off healthy people who would otherwise buy coverage in the exchange.  Margot: Speaking of politics, these are the sort of scary increases that Republicans have been warning about for years. Yet it doesn’t seem like killing Obamacare is Donald Trump’s top policy priority. How do you think this is going to affect the election?  Reed: It’s hard to know. Most people still get their insurance through an employer, and those rates are not going up by double digits, so I’m not sure the outrage will be so widespread. About this issue, at least.  An earlier version of this article gave an incorrect number of major cities where Kaiser looked at Affordable Care Act plans in its analysis of rising costs. It was 14, not 13.
A new study shows health plans are asking for rate increases twice as high as last year’s. Two health reporters discuss what it means for the future.