ObamaCare premiums lower than expected


“The initial data suggest that competition in exchanges is working to lower premiums, which will benefit nonsubsidized enrollees and the federal government,” said Caroline Pearson, vice president at Avalere Health.

Avalere compared early filings for the specific plans the government will use to determine the level of tax credits available to help people cover the cost of their premiums.

In the nine states that have publicized their 2014 rates, every benchmark plan came in cheaper than estimated by the Congressional Budget Office.

The CBO has said it expects the benchmark policies to cost an average of $433 per month. The actual rates filed so far range from $205 to $413 per month — even the most expensive policy is still below the budget office's estimates.

Although the rates are lower than expected, they're still higher than what young, healthy people are paying now for comparable coverage. 

The analysis, like the healthcare law, applies to policies that people buy on their own when they can't or don't get insurance through an employer.

Avalere's analysis also comes with a catch: the consulting firm compared rate filings for 2014 to CBO estimates for 2016. The CBO has not publicly released an estimate for 2014, Avalere said.

So, lower-than-expected premiums next year could still rise to the level the CBO predicted — or even higher — in the next two years. 

That's especially likely if insurers are intentionally setting their prices low in the beginning, to attract initial business, and plan to raise them once the new system is more fully engrained.

But other factors could also limit the rise in premiums between 2014 and 2016, Avalere said. The sickest and most expensive patients are likely to enroll first, while it might take longer to enroll younger, healthier customers. As more of those inexpensive people come into the system, they'll help minimize premium increases.