Consumers Worried About Rising Health Insurance Costs and Exchanges

NEW YORK (MainStreet) — Most Americans (56%) are not confident that the Obamacare health exchanges will operate smoothly during this fall's open enrollment period, according to a new Bankrate.com report.

The exchanges open again November 15 until February 15, 2015. The survey also found that 32% are "not at all confident," which was the most common response and another 24% are "not too confident."

"The Obama Administration is still having trouble getting Americans to believe in affordable health care, despite the Department of Health and Human Services' recent report that nearly half the people buying subsidized plans on HealthCare.gov are paying $50 a month or less for their health plans," Bankrate.com insurance analyst Doug Whiteman said.

Most plans on the exchanges are very affordable with the average plan costing a single consumer $82 a month, he said.

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Fewer than two in five people are confident in the technical capabilities of the exchanges despite the updates that were made, said Whiteman.

"This demonstrates the long shadow cast by the bungled rollout of the exchanges last year," he said.

Americans also fear that they will be met with much higher insurance premiums for health plans during the upcoming enrollment season with 46% who said this could be a major problem. Only one in 12 Americans report lower monthly health care spending now than a year ago compared to almost half who report higher spending.

"There is a still lot of confusion, skepticism and pessimism," Whiteman said. "People are really concerned about costs increasing."

The concern about skyrocketing health insurance premiums is unfounded, he said. According to a PWC report on rate requests from insurance companies, most are asking for a 7.5% increase on average compared to double digit increases which were fairly common 10 years ago. Since insurance is regulated by each state, some entities may approve smaller increases.

Some 37% of Americans say they feel "more negative" now than they did a year ago about the Affordable Care Act's impact on their own health care, more than twice as many as the 16% who feel "more positive." The negative sentiment is up nine percentage points from August 2013.

Between 2013 and 2014 when the last big provisions of the health reform law went into effect, the cost of individual and family coverage already increased substantially, said Carrie McLean, director of customer care at eHealth.com, an online health insurance exchange based in Mountain View, Calif.

According to data published by eHealth, the national average monthly premium paid for individual coverage was $197 per month and the average monthly premiums paid for family coverage was $426 per month in 2013.

By 2014, the plans purchased by eHealth shoppers during the last open enrollment period rose to an average premium of $271 per month for individual coverage and $667 per month for family coverage. To check out the plans, click here.

"We talk to health insurance shoppers every day and their number one concern is the cost of coverage," she said. "Health plans just cost a lot more in the post-reform era than many people expected to pay. Consumers may be getting better coverage, but the cost of it can be a serious burden, especially for the millions of people who don't qualify for government subsidies."

If the cost of health insurance jumps significantly again in 2015, consumers who are not eligible for government subsidies will have an even harder time affording their coverage, McLean said. It's possible that more may be forced to go uninsured or underinsured, leaving themselves open to possible tax penalties.

"What's more, if a recent court decision challenging the validity of federally-administered subsidy dollars is upheld, an even greater number of American health insurance consumers could suddenly find their coverage unaffordable," she said.

An analysis of the costs borne by subsidized vs non-subsidized health insurance consumers based on data from the U.S. Department of Health and Human Services found that among shoppers who used subsidies, the average premium across all metal levels for an individual plan before subsidies were applied was $346 per month. After subsidies were applied, the average premium cost to the consumer was $82 per month.

Among shoppers without subsidies and across all metal levels, the average premium for an individual plan was $271 per month, the full cost of which would be borne by the consumer.

"If subsidies were to go away, how would people used to paying less than $100 per month from their own pocket be able to afford coverage if their monthly premium increased by more than $200?" said McLean.

Additional consumers need to know that premium tax credits which lower monthly premiums are available for Americans who earn between 100% and 400% of the poverty level, depending on household size and annual income, said Mark Colwell, director of consumer marketing at GoHealth, a Chicago-based online exchange for health insurance.

"Consumers who take advantage of tax credits and make the right health plan choice will be surprised how they can actually find health insurance at an affordable cost," he said.

More people need to understand that selecting the right health insurance plan to balance out-of-pocket costs and coverage levels will maximize the cost-effectiveness of a plan.

"Consumers can estimate their tax credit at services such as GoHealth where they can savings applied immediately to premiums before making a purchase," Colwell said. "Through GoHealth, shoppers can also speak with licensed advisors who can provide plan recommendations based on their individual needs."

-Written by Ellen Chang for MainStreet

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