Federal regulators opened the federal exchange Healthcare.gov for consumers to browse for plans on Monday, as they announced that rates will be up 25% for the plans for which the tax subsidies are calculated.
The Department of Health and Human Services also warned that more than one in five consumers using the site will only have one insurer from which to choose coverage.
As concerns grow about much higher rates in many states, officials emphasized that the vast majority of people shopping on Healthcare.gov will pay less than $100 a month for premiums when tax credits are included. More than 70% of people will pay less than $75 a month after tax credits.
Healthcare.gov handles individual insurance sales for those who live in the 38 states that don't have their own exchanges.
The second lowest cost silver plan on the exchanges is the benchmark plan that regulators base tax credits on. That's the rate that is up 25%, which is also the expected overall increase in 2017.
"This is a big increase in an environment where health care cost growth is generally modest and incomes aren’t growing much at all," says Larry Levitt, senior vice president at the Kaiser Family Foundation. "The increase is largely a reflection of insurers catching up to the fact that the number of sick people signing up for insurance is bigger than expected."
On average, consumers will have 30 plans to choose from and the average insurer has 10 plans for sale. HHS officials briefing reporters Monday reminded that most people with employer-provided insurance have few far choices than those shopping on the federal exchange.
HHS said earlier this month that about 2.5 million people eligible for tax credits to lower the cost of their premiums are missing out, because they are buying their insurance through insurers or brokers instead of the state and federal exchanges. The Kaiser Family Foundation announced last week that about 5 million people who are uninsured could get financial assistance to cover the cost of their insurance.
Even those who weren't eligible for tax credits in the past should apply again, because they may qualify now that many rates are much higher, said HHS spokesman Kevin Griffis.
Among people with health insurance coverage through an employer, plan choice is often considerably narrower, HHS officials stressed. Sara Collins of the Commonwealth Fund , which is releasing an analysis of employer-provided insurance Wednesday, says most people with insurance through work have just one insurer and many only have two choices from that insurer.
Even in Arizona, where rates were up more than 50% overall for 2017, four out of five people will be able to buy a plan for less than $100 a month, said Kathryn Martin, HHS' acting assistant secretary for planning and evaluation. HHS says Arizona is among the states — including Kansas, Pennsylvania and Illinois — that had big rate increases in part because their 2016 rates were far lower than the national average.
No matter where they live, consumers who are eligible for tax credits will protect them from rate increases. Consumers pay a fixed premium amount based on their income and the tax credit is the difference between the premium of the benchmark plan and this amount, says Collins.
If their plan is not the benchmark plan and the premium is higher, then they will still get the same tax credit as they would for the benchmark plan. That means they will pay higher premiums. But the reverse is also true, which is why Collins says consumers need to shop around and consider premium costs, deductibles and co-pays.
Much else about Obamacare in 2017 will be different, however.
"There will be a lot of upheaval for consumers this open enrollment period, with premiums increasing substantially in many parts of the country and fewer insurers participating," says Levitt. "Whether this is a one-time market correction or a sign of more problems ahead will depend in large part on how consumers react to the changes."