Double-digit premium increases predicted

Double-digit premium increases will likely be seen this year because of Obamacare, according to an analysis from Avalere Health.

Many in the industry had expected the age mix of exchange enrollees to drive up premiums but Avalere said that wasn’t the case. Instead, the consulting firm this week blamed the increasing cost of medical care, utilization of services and new medical technology — all of which “make it likely that exchange plans will need to increase their prices.”

Premium increases will vary geographically, and will depend in part on the competitiveness of provider markets, it said.

The firm’s findings about increasing premiums is not a new prediction, echoing other reports about rising health costs for consumers. Last month, a survey of brokers by Morgan Stanley health care analysts concluded that health premiums are rising so sharply that, in some states, increases are in the triple-digits.

Avalere research also found that the federal government will “bear a disproportionate burden of premium increases” in states with high rates of subsidized enrollees. Nationwide, 85 percent of exchange enrollees are receiving financial assistance.

“This ranges from 16 percent in Washington, D.C., to 94 percent in Mississippi,” Avalere said. “While this could dampen the need for plans to price premiums competitively, it could also lead HHS to consider a more active purchasing approach over time.”