Cost of some Obamacare plans set to soar, but actual effect on consumers could be limited

Consumers will be stunned by the rate increases for some health plans sold directly to individuals and families next year through exchanges set up for the Affordable Care Act, with premiums rising by more than 50% in many Wisconsin counties, based on estimates released Thursday by the state insurance regulator.

However, once the initial shock passes, consumers who buy health plans on the exchanges will need to remember two things:

• For people who receive federal subsidies, the cost of the health plans is capped to a percentage of their income, ranging from 2.04% to 9.69%. They will be largely unaffected by the price increases.
• The increases will be far smaller — an estimated 21% statewide — for health plans sold in the so-called bronze tier, which effectively will be the only option for people in Wisconsin who buy insurance on their own and are not eligible for federal subsidies.

The Office of the Commissioner of Insurance estimates that premiums will increase an average of 36% statewide. But that’s an average of averages, and the actual increases will vary throughout the state and by health plan. The actual rates will become public on Nov. 1 when the marketplaces open.

The Office of the Commissioner of Insurance released the estimates Thursday to prepare people for the potential shock.

The price increases will affect only the market for insurance sold directly to individuals and families, as opposed to those getting benefits through their employer.

The people most affected are the estimated 20,000 to 30,000 people in the individual market who don’t receive federal subsidies and who aren't in so-called transitional plans sold before 2014.

“They are going to be the ones who are hit the hardest,” J.P. Wieske, deputy insurance commissioner, said in a teleconference.

The steepest increases will be in health plans sold in the so-called silver tier.

Here’s why:

• The Trump administration and Congress have not taken steps to fund the additional subsidies that go to people with lower incomes who buy insurance through the marketplaces. The subsidies help offset deductibles and other out-of-pocket expenses.
• Insurers are required to provide the additional coverage but may no longer be reimbursed by the federal government for the costs.
• The only way to offset the costs is to raise premiums. But the Office of the Commissioner of Insurance and regulators in other states are allowing health insurers to allocate the costs to health plans sold in the silver tier. Premiums for health plans in the bronze and gold tiers will increase less.

Most of the people who buy plans in the silver tier — about 91% this year in Wisconsin — are eligible for subsidies that, again, cap the cost to them.

Individuals and families with incomes below 400% of the federal poverty threshold — $48,240 for an individual and $98,400 for a family of four — are eligible for subsidies.

Most people who aren't eligible for subsidies now buy health plans in the bronze tier.

RELATED:If Trump decides to 'let Obamacare implode,' rates will soar for millions

The uncertainty caused by the turmoil in the market also has contributed to the rate increases.

Molina Healthcare, which had the largest market share among insurers who sell health plans on the marketplaces, and Anthem Blue Cross and Blue Shield in Wisconsin will not sell health plans on the marketplaces next year.

As a result, roughly 75,000 people will have to shop for new health plans.

“The increases we are seeing reflect the increased amount of risk that a smaller number of carriers are going to have to take on,” Wieske said.

It also raises questions whether the market is sustainable.

"Nobody wants to compete for this market, despite the subsidies that are available to consumers," Wieske said. "That is sort of troubling.”