What’s the truth about rate increases under Obamacare? It’s complicated.

Six-month-old Hazel Garcia chews a pamphlet at a health insurance enrollment event in Cudahy, California March 27, 2014. More than 6 million people have now signed up for private insurance plans under President Barack Obama's signature healthcare law know

Obamacare premium rates are skyrocketing! Obamacare premium rates decrease! So which is it? That depends on where you live and what plan you’re on. But as Jonathon Cohn details, overall increases are going to be relatively modest—though there are going to be some large spikes in some areas. And in those areas, competition will likely provide more affordable alternatives. Which is kind of how the marketplace works and also pretty much how the law was designed.

[A]fter two years of premiums that seemed surprisingly low, at least by the standards of private health insurance in the U.S., some insurers are raising prices to adjust. That’s the source of the big hikes that have the attention of Trump and other Affordable Care Act critics. And it’s why, according to ACAsignups.net blogger Charles Gaba, premiums would rise between 12 and 13 percent on average if everybody who currently

insurance simply renewed the same plans for next year.
But, as Gaba points out and Politifact noted recently, the averages also mask a lot of variation. Some insurers are raising premiums more modestly and others are actually reducing rates. People faced with increases can, and frequently will, find cheaper alternatives. In addition, the vast majority of people buying coverage through healthcare.gov or one of the state marketplaces are eligible for tax credits that can reduce premiums by hundreds and sometimes thousands of dollars a year for lower- and middle-income buyers.

For these reasons, many analysts think the best indicator of how premiums are changing is to compare the price of the second-cheapest “silver” plan in 2016 to the second-cheapest silver plan of 2015. According to an analysis that HHS released on Monday, the difference is just 7.5 percent—and that’s before taking into account the tax credits that could wipe out some or all of the increase for many consumers. With those tax credits in hand, HHS says, most people buying coverage on the federal or state marketplaces can find insurance for less than $100 a month.

These premium increases are a function of insurance companies now understanding exactly what they’re doing in this new market—one that many hadn’t ever participated in before—and what the pool of patients they’re insuring looks like. The adjustments they’re making now reflect that experience. They also reflect the very good stuff that the law requires of those insurance companies: They have to provide for preventive care without copays, they have to provide maternity coverage, and they can’t refuse to cover certain people or their pre-existing conditions or charge them a great deal more for their coverage.

So with the marketplace opening again for enrollments on November 1, this is what people should recognize. If you’ve already got an Obamacare plan and you don’t like how much your premiums are increasing, shop around and chances are you’ll find something more affordable—and don’t forget the tax credit that something like 80 percent of people buying on the exchanges qualify for.

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