“Plans are raising premiums in 2018 to account for market uncertainty and the federal government’s failure to pay for cost-sharing reductions,” said Caroline Pearson, senior vice president at Avalere. “These premium increases may allow insurers to remain in the market and enrollees in all regions to have access to coverage.”

Avalere experts attribute premium increases to a number of factors, including elimination of cost-sharing reduction (CSR) payments, lower than anticipated enrollment in the marketplace, limited insurer participation, insufficient action by the government to reimburse plans that cover higher cost enrollees (e.g., via risk corridors), and general volatility around the policies governing the exchanges. The vast majority of exchange enrollees are subsidized and can avoid premium increases, if they select the lowest or second lowest cost silver plan in their region. However, some unsubsidized consumers who pay the full premium cost may choose not to enroll for 2018 due to premium increases.

Average premium increases will vary significantly by state. For example, Iowa will see the highest jump in average silver premium, 69%, over 2017, while Alaska will see a decrease in premiums for 2018, at -22% (Table 1). Exact premium amounts consumers can expect to pay will vary depending on their location and selected plan. Notably, in states with limited plan participation, the average silver premium maybe lower than the second lowest cost silver.

Additional Context

Importantly, these rates reflect the data current displayed on HealthCare.gov. These rates may change prior to open enrollment depending on how states respond to the elimination of CSR funding for the 2018 plan year. States where health plans were not permitted to provide an amended or second set of rates assuming the loss of CSRs may permit health plans to refile their rates prior to 2018 open enrollment, due to the elimination of the CSR payments. In states where this occurs, it is expected that the newly updated rates will be substantially higher for the 2018 plan year.

Methodology

To conduct the analysis, Avalere utilized the recently released 2018 Individual Market HHS Landscape Files of 2018 exchange plan premiums in Healthcare.gov states. Avalere then compared the average unweighted premiums within each state by metal level to prior years analysis of the Individual Market HHS Landscape files. To calculate the average premiums, Avalere deduped the files to unique plans in each rating region in each state. Avalere used premiums for a 50 year old individual to calculate the averages.

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