(Bloomberg) -- Most buyers of Obamacare plans won’t see their costs jump, even if premiums increase next year, because of government subsidies, the U.S. said in a study that pushes back on reports of challenges facing the health-coverage overhaul.
Government contributions to premiums will mask the rise in costs for most buyers on the program’s exchanges, according to the report from the U.S. Health and Human Services Department.
The study comes amid mounting reports of skyrocketing premiums: In Tennessee, for example, the state’s Blue Cross and Blue Shield plan is boosting rates 62 percent, according to The Tennessean.
“Headline rate increases do not reflect what consumers actually pay,” Kathryn Martin, HHS’s acting assistant secretary for planning and evaluation, said in a statement. “Even in a scenario where all plans saw double-digit rate increases, the vast majority of consumers would continue to have affordable options.”
The U.S. report highlights a bright spot for the Affordable Care Act, where signs of trouble are mounting.
Insurers including UnitedHealth Group Inc. and Aetna Inc. are halting their sales in some states, citing financial losses, while many remaining insurers are boosting premiums. The subsidies may help ensure that buyers stick with the markets even as insurers boost premiums, helping avoid a situation where the markets become unstable because too few buy coverage.
Even if premiums rise by 25 percent, about 78 percent of shoppers will be able to buy health plans for $100 or less a month in 2017, compared to 76 percent this year, according to the report. The ACA offers subsidies to individuals with incomes of as much as 400 percent of the poverty level. As of March 31, about 9.4 million of the 11.1 million people in Obamacare plans on the exchanges were getting subsidies.
Individuals who don’t get the government subsidies, as well as people who buy individual health insurance through Obamacare exchanges, will bear the full cost of rate increases, though they may have the option of switching to cheaper plans. About 9 million people buy individual plans outside the exchanges, the Congressional Budget Office has estimated.
The U.S. report simulates the effect of increasing all health insurance premiums by 25 percent in the 38 states the use the federal Healthcare.gov website. It doesn’t analyze actual 2017 premiums, which are still being evaluated by regulators in some states. The sign-up season for 2017 coverage begins Nov. 1.
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