Obamacare 2017 Premium Hikes 25 Percent. What Next?

p_kleyman_medicut_500x279The Administration has confessed the average 2017 Obamacare premium hike for the benchmark (second-lowest cost) Silver plan will be 25 percent. (Back in June, it looked like the hike would be 16 percent.)

Don’t worry, says the Administration, tax credits will ensure beneficiaries only pay a fraction of their premiums. It is true, very few people would buy Obamacare plans without the tax credits the Administration cheers. However, that is not a sign the plans are “affordable,” but only that taxpayers are bearing more of the burden.

Nor do the tax credits actually prevent people from sticker shock. In fact, the design of the tax credits usually makes the net premium hike higher than the gross premium hike. For example, the average premium hike next year in California will be 13.2 percent, but a 56-year old woman in Los Angeles just learned her premium will jump 57 percent next year.

When the Affordable Care Act was passed in 2010, the Congressional Budget Office estimated 23 million people would be in exchanges in 2017, subsidized by $75 billion of tax credits. That’s an average tax credit of about $3,260 per person (including those who receive no tax credit).

In 2016, the average tax credit (for the 85 percent of enrollees who receive tax credits) was $3,480, but it was still not enough to prevent almost half the eligible people from signing up. The Administration expects fewer than 14 million people to enroll in Obamacare plans next year. Recall that is the total number of people who sign up during the year. The number who actually stay in an Obamacare for the full year is much less – about four million.

Further, the Administration’s estimates assume every single applicant will “shop around” and switch Obamacare plans if the one they had in 2016 is no longer the least expensive. However, that is not what happens. The “shopping” is so confusing, fewer than half of beneficiaries switched plans in 2015 and 2016. There is no reason to expect that share to grow.

Further, the Administration has announced those who lose their plans because their insurer is bailing out of the exchange will have a special enrollment period extending to March, instead of the previously announced end of January. This will exacerbate the problem of adverse selection, whereby applicants wait until they need medical care to enroll, accelerating Obamacare’s death spiral.

Comments (42)

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  1. Lee Benham says:

    “Nor do the tax credits actually prevent people from sticker shock. In fact, the design of the tax credits usually makes the net premium hike higher than the gross premium hike. For example, the average premium hike next year in California will be 13.2 percent, but a 56-year old woman in Los Angeles just learned her premium will jump 57 percent next year.”

    The media are continuing to mislead people with these statements. Tax credits, subsidies or what ever you want to call them do not lower premiums! The premiums for the insurance is the same with or without subsidies. The only thing that changes is who is paying. The media says very few people will be affected. I would argue every tax payer in America is affected.

    The reality of what will happen is what we have been saying what will happen since 2010.
    The premiums are so high that the 8.5% affordability exemption will exempt about 90% of the population from the penalty. Healthy people will buy non ACA compliant plans leaving only the sick and subsidiesd individuals in the exchanges driving the costs up even more for 2018. The ACA is not a fixable law and any attempted to fix it will destroy the employer based system.

    • Ron Greiner says:

      Individual health insurance skyrocketing premiums will pave the way for higher premiums on employer-based plans in the future. The system is rigged against everybody.

      How much will Miami-Dade county employees cost in the future when the 2016 cost per family for PPO insurance is $3539.98 per month or $42,479.76 a year?


      Taxpayers are almost too stupid to feel sorry for.

      What Is At Stake In The Election

      Paul Craig Roberts–If the American people are really so unbelievably stupid that they think lewd remarks about women are more important than avoiding nuclear war, the American people are too stupid to exist. They will deserve the mushroom clouds that will wipe them and everyone else off the face of the earth.–

    • John Fembup says:

      “The only thing that changes is who is paying. The media says very few people will be affected. I would argue every tax payer in America is affected.”

      Yes. Obama and his administration are moving the shells around again when they say that Obamacare subsidies shield people from most of the premium increases.

      It’s a shell game because paying higher premium subsidies Increases government spending. The government has to raise taxes or borrow to make the payments – thus increasing the deficit.

      But wait – remember this on September 9, 2009

      “I will not sign a plan that adds one dime to our deficits — either now or in the future. (Applause.)”


      That is no longer an applause line. It’s a joke. Sadly, Obama is the only one laughing.

  2. Bob Hertz says:

    Actually, the federal spending on subsidies so far appears to be a little less than what was projected in the ACA bill.

    According to the attached article, the bill expected 21 million to sign up by now and only 11 million have signed up.


    Of course. the ACA subsidies could easily become a true budget hog in the near future.

    I wonder if anyone has done the numbers on whether the cats and dogs new taxes of the ACA have brought in enough money to make the plan budget neutral so far. I doubt it. And the Cadillac tax may never bring in any money.

    • Ron Greiner says:

      Most people are on Medicaid and the cost is higher than expected.

      Trust me, the ACA is a huge budget hog.

    • ColoComment says:

      Remember, too, that the long-term care part of the law was front-loaded with premium revenue designed to help with the budget “neutral” result based on including that in CBO scoring assumptions. Under the law (IIRC) payments were delayed until past the CBO’s 10 years of scoring.
      And that L-T care part was dropped long ago, depriving the program of that “revenue.”

    • I do not believe Treasury reports regularly on revenues to that degree of detail. Nor does CBO tell us its estimates to that degree of detail.

      On the other hand, it does not really matter because significant Obamacare taxes have been delayed/deferred and are unlikely to take effect (medical device excise tax, etc.)

  3. Lee Benham says:


    I’m not understanding your comments after all I’m an uneducated deplorable. Are you saying the ACA is under budget?

    If I recall when I first read the proposed law back in 2009 part of the original law was the CLASS act to force employers to contribute to individual long term care plans. The CBO was able to use that part of the law to project ACA costs over a 10 year period to be about 950 Billion. The CBO used a 10 year projection of income into the trust but only 5 years of payments. I think the quote was a Ponzi scheme that would make Bernie proud.. We now know that the removal of the class act and subsequent other changes has ballooned the cost to over 3Trillion .

    Are you really trying to justify the fact that 10 million less enrolled than forecast has kept the cost within the original forecasted budget?

    • Ron Greiner says:

      Bob is like a Democrat who thinks that if you lie and say it costs less than projected you have saved a lot of money. Democrats are professional liars. Their leader, Hillary, speeches to Wall Street read like a guide to two-faced treachery. In them, she clearly points out that sometimes you “need” to lie. “If everybody’s watching, you know, all of the back room discussions and the deals, you know, then people get a little nervous, to say the least. So, you need both a public and a private position.”

      When the government spends $1 million more per minute than they bring in it makes you wonder, “What difference at this point does it make?”

  4. Devon Herrick says:

    I’ve been comparing the average price increase and there seems to be no correlation to Medicaid expansion. One person on Twitter noted many states with the highest increases are Red States. However, if I compare I suspect the Red States are merely catching up with the high premiums the Blue States have had for years.

    • Lee Benham says:

      I think it’s more of the red states first loosing the PPO plans in favor of HMO plans and now the elimination of most HSA plans. The Red States have had the majority of HSA plans sold over the years . HSA qualified plans are on the verge of extinction .

      In my home state of Nebraska Aetna no longer offers an Individual HSA plan on the echange and medica offers one that is priced so high it makes the tax savings irrelevant ….

    • Ron Greiner says:

      Steve Jordan in Omaha today is reporting on the average cost per employee: “Next year’s costs would average $11,779 for Nebraska and Iowa and $12,409 nationally.”

      Over $1,000 a month per employee in 2017 – ouch!!

      Hillary has said she is going to use the Cadillac Tax to UNRAVEL the ACA (OBAMACARE)

      Hillary did further assert — we will respond militarily to Russia over Wiki-Leaks and when the Commander-in-Cheif gives the command we will have ICBM’s in the air in less than 4 minutes.

      The best campaign ad for Donald Trump and the Deplorabels:


  5. Bob Hertz says:

    All I was saying is that the subsidies alone for the past three years have been roughly on budget. But only because the ACA has been less popular. If we are currently subsidizing 10 million persons and we projected subsidizing 20 million, you get a little break on the budget. It is not a big deal.

    Ron is correct that the cost of expanding Medicaid has been way over budget.

    The Obama team does not care about being on or off budget. They are busy congratulating themselves on creating a new entitlement.

  6. Lee Benham says:

    What’s Next?
    Adaptation: How healthy people will look to adapt to the high cost of Insurance.
    With the premiums for qualified ACA compliant plans becoming more and more unaffordable, healthy individuals and families will look for alternative ways to protect themselves from catastrophic medical losses and look for ways to finance the outrageous premiums.

    We first have to ask the question: Why do people buy insurance?

    My definition of insurance is spreading individual risk over a large group of people that cannot be personally financed. If the insured had a crystal ball and could see the future and knew for a fact they would never have a claim for more than $10,000 would they buy insurance? Of course they wouldn’t.

    People buy insurance so they don’t lose everything they have ever worked for with a catastrophic illness.

    The Bronze plan by design is supposed to pick up about 60% of the average annual health care expenses.

    The average 50 year olds health care expenses are about $3500 a year and an average 10 year old child is about $1400. A 40 year olds average yearly health care expenses are about $2500 and a 30 year olds about $1500.

    So what kind of choices do these insureds have?

    A 50 year old couple with two kids in the 68136 zip code can chose from several plans.

    Aetna $1,170 a month with a $14,100 out of pocket or they could chose a silver plan for $1,395 a month with a $12,150 out of pocket. Then again they could choose a HSA qualified plan for $1,842 a month with a $12,800 out of pocket.

    Let’s assume the insured picks the least expensive plan of $1,170 a month. This insured will spend $14,040 in premiums to limit the risk of his medical expenses to $14,100 per year.

    The average cost of a 50 year old couple with 2 kids is only $9,800 a year.

    Why would this insured spend $14,040 in premiums to finance average claims of $9,800 when the insured will pay most of the $9800 anyway?

    Because the insured could still lose everything they have ever worked for.

    Faced with these choices Healthy individuals will adapt to alternatives options to limit their risk.

    Before the ACA people could buy policies throughout the year and the effective dates would be when they took the policies out. However that is no longer the case. Because of open enrolment all individual ACA plans operate on a January 1 to December 31 cycle.

    Even if you buy a plan in the middle of the year you will have to renew the plan on the next January 1 cycle date.

    This change has also changed the number one goal of all insureds and that is to get from January 1 to the next January 1 as inexpensively as possible.

    Here is a possible adaptation for the 50 year old healthy couple. They buy a United Health Care Short term Plan for 360 days that gets them to the next open enrollment with a $5,000 deductible 80/20 plan to $2,000 for $543 a month.

    If the insured chooses the STM plan they have a problem if one of them gets sick on the policy and cannot get a new policy the following January.

    The individual who could not qualify for a new policy would then have to go on an ACA qualified plan during the next open enrolment.

    However we know that the ACA plans are expensive so how can the insured limit their risk?

    The ACA has had a direct impact on the amount of Critical Illness policies sold in the United States.

    CI policies pay a lump sum to the insured when a covered illness is diagnosed. So the insured looks to add A CI policy for $100,000 to cover heart attack, stroke or cancer.

    They would then have the funds to help pay the ACA premiums they will be faced with the following year.

    The Insured adds a $100,000 Mutual of Omaha CI policy on to his short term for the two 50 year old that would run about $194 a month.

    Total Premium of the STM and the CI would run about $737 a month vs the ACA cheapest bronze plan for $1,170 a month.

    The insured would not have to worry about paying the ACA penalty because of the 8.05 affordability exemption until they made more than $174,409 a year. (1170/8.05%=14,534×12=174409)

    However can the insured get protection even cheaper?

    What if the insured bought a life insurance policy with living benefits that would pay out close to the CI policies? The same insured looks at a mutual of Omaha life policy of $100,000 that will pay out up to 80% of the death benefit for critical illness, chronic illness, or terminal illness. That policy would run about $140 a month for the 50 year old couple.

    So now the Couple has gotten Health insurance, Life Insurance, Critical Illness Insurance, Chronic Illness insurance and terminal illness insurance for about $683 a month.

    Which plan do you think a healthy individual might decide to buy?

    This is just one of several choices Healthy people have. There is nothing the government can do to solve the problems with the ACA because healthy people have options and will adapt.

    • Barry Carol says:

      Whatever people decide to do, they better understand the consequences of being wrong. Even healthy people can be badly hurt in a car accident, skiing accident or other sports injury. A baby could be born into the family prematurely with severe complications requiring care with bills in the seven figures.

      If you can handle a $10K deductible, that’s great but the big money costs are in the expensive unpredictable events. It’s not just cancer or heart disease.

      By the way, a 60% actuarial rating means that the policy will cover about 60% of the healthcare costs incurred by a standard, average risk population. For any given individual, it may cover none of their costs because the deductible wasn’t met or it may cover well over 90% because he racked up very high bills from a catastrophic event.

      • Lee Benham says:

        Gosh Barry you are correct anything can happen. That’s why People buy insurance. Everything you mentioned that could happen would have been covered. 1.5 million of coverage is more than enough to get anyone to the next open enrolment …maybe you should go to my web site and read up on the plans that obviously you don’t understand …

        • Ron Greiner says:

          Barry should never be so confused to think that his goofy liberal propaganda is as valuable as someone who actually knows what they are talking about.

          I’m sure consumers in NE will will consider affordable options in 2017 with their Obamacare premiums going up 51%. Same with consumers in PA where Obamacare premiums are going up 53%. OK up 69%. MN up 59%. AL up 58%. AZ up 116%.

          IL up 43%. NC up 40%. KS up 42% MT up 44%.

          Barry, when you repeal Obamacare young Americans and childrens’ health insurance premiums will drop like a rock because Obamacare requires that the premiums can’t be less than 33% of a 64-year-old male’s premium.

          Barry, why do you want young people to pay so much?

          President Trump will replace Obamacare with tax-free HSAs.

  7. Ron Greiner says:

    The Aetna $1,170 a month with a $14,100 out of pocket is an HMO and the STM plan from United Healthcare is a PPO so it is hard to compare even if the premium is only $543 a month. A PPO will cost 20% more than a limited HMO.

    There is no way to fix Obamacare just like you can’t fix my wife getting older. There is no cure.

    Republican age-based tax credits for this family would be $8,000 a year which would pay 100% of the premium of $6,516 and $1,500 would be deposited into the family’s tax-free HSA with a mutual fund option. If the family raised the deductible to $10,000 then the premium would go down and the tax-free HSA deposit would increase with the age-based tax credit of President Trump.

    Trump will replace Obamacare with tax-free HSAs!

  8. Bob Hertz says:

    Lee, thanks for your research into using critical illness insurance to substitute for the ACA.
    I wish it worked better than it does.
    If a person had serious wrist injuries in an accident, the bills might total $35,000 and critical illness insurance would be of no use.
    My own situation would argue for critical illness insurance, though. I had a heart attack 9 years ago and a non-fatal cancer two years ago. My insurers paid out about $100,000 in total claims. A $50,000 critical illness plan (which paid out for multiple claims) would have left me about even. Feels risky.

    My own solution, rather radical, is that a federal law would state that a person’s home equity, retirement accounts, and $50,000 in other savings would be protected from medical bills.

    People then would not buy crappy health insurance to protect their assets. They might buy a zero deductible HMO because they liked free care, just like some people and firms pay attorneys a retainer.

    In my world, hospitals and drug companies would have a hard time collecting $200,000 for keeping one patient alive for four months. Doesn’t bother me a bit.

  9. Lee Benham says:


    If a person had a serious wrist injury they would still have been covered under the short term plan and it would not prevent them from buying another short term plan at the end of the term. The would also have the option of buying an ACA compliant plan during the next open enrolment.

    The insurance world changed 1/1/2010
    The price of ACA compliant plans do not make economic sense. When premiums are double the price of the actuarial value to cover a % of a normal persons yearly healthcare costs the insurance is no longer financially justifiable. It doesn’t mater if subsidies are provided or not the plans are charging more in premiums than they are worth.

    I will argue that every health insurance plan in the country in now operating as a yearly insurance plan . The only major differance in the short term plans is the underwriting.

    How many of your ACA compliant clients have had the same plan more than 1 year. I already know the answer it will be 0. The plans have changed every year since the inseption.

    I have always said that healthy people have options and health people will buy STM in combination with CI and accident policies because it makes financial sense to do so.
    The rising cost of ACA plans will expedite the trend.

  10. Lee Benham says:


    Let me explain another example.

    I had a potential client call in today.
    68138 zip code. 52 year old male and 54 year old wife.
    Earn about $120,000 a year so do not qualify for Tax Credits.

    Wife has rheumatoid arthritis. Short term is not an option for her.
    Husband no health problems or medication being taken.

    Options for the couple

    Option 1: couple can go on the least expensive ACA Compliant plan for $988 a month with a $14,100 OOP.

    Option 2 Wife goes on a ACA compliant plan for $516 a month with a $7050 Deductible and Husband goes no a STM plan for 360 days with a $5000 deductible for $222 80/20 plan to 2000.

    Option 1: the couple will pay $11,856 in premiums to cap their risk of medical expenses to $14,100

    Option 2: the couple can spend $8,868 in premiums to cap their risk of medical expenses to $14,050

    couple does not risk ACA penalty because of affordability exemption.

    As an agent which option would you advise this client to apply for?

    I have looked at several ways and my feelings is this couple can stay married but they need to split up their insurance plans. Why should the husband pay more just because the wife cant make it through underwriting?

    Guess what plan the Navigators Recommended?
    the Silver HMO for $1,232 a month with a $12,600 OOP.

    • Ron Greiner says:

      The Navigators recommend to up the premium by $244 per month or $2,928 per year by lowering their max out-of-pocket by $1,500 a year – too stupid.

      Then they probably close by saying, “Buy this insurance or I will turn you into the IRS!”

    • Or pay the $2,085 fine and cross your fingers.

  11. Bob Hertz says:

    I hope that HHS does not follow through on the threat they made last June to chop down short term medical to 3 months and no renewals.

    Has anyone heard about this issue lately?

    • Ron Greiner says:

      Bob, it is impossible to talk about Short-Term-Medical (STM) and let consumers know that there is an option to over-priced Obamacare. Notice how the NCPA and the media refuse to say a word. Imagine if people knew about STM then healthy people would save thousands and only sick people would go to Obamacare. Ha Ha Ha – of course this is happening because the insurance agents sell STM and only the sickos are going to Obamacare now.

      Obamacare is done and it’s a secret!

      • Bart I says:

        The problem with these brilliant money-saving strategies that use STM is they seem to rely on ACA plans as a fallback if you get sick and can’t roll over. I wouldn’t want to depend on ACA plans being available when the time comes to renew.

    • Lee Benham says:

      No change will come until 2018 however the ruling that the administration was overstepping there authority on Indemnity plans which STM was included is a good sign they will not be able to stop millions of people buying the only affordable option to them.

  12. Ron Greiner says:

    Bob, Miami-Dade County employees with families are costing taxpayers $42,000 per year for employer-based PPO insurance.

    In the Miami 33101 zip code STM for a 40-year-old couple with 2 children can get PPO coverage for $497.63 per month with a $250 deductible on accidents and $5,000 for sickness.

    With President Trump’s age-based tax credits, of $6,000 for this family, they can get insurance 100% paid for and the Miami-Dade taxpayers’ cost will drop to ZERO!

    President Trump will lift the cost of health insurance off the backs of America’s employers and the economy will soar like never before.

    • Ron Greiner says:

      too funny – Hillary doesn’t have a clue – keep shopping – (33% of a American counties have only one insurance company on the exchange) – Hillary wants more competition – hahaha

      Did you see how Hillary was about to cry when that question was asked?

      too much profit – lol

    • Bart I says:

      In short, “Endeavor to persevere.”

  13. Lee Benham says:

    Well I guess the Demtards are going to take the rest of the affordable health insurance down with the ship!

    Short term medical will only be sold for longer than a 90 day duration until April 2017.
    So this is the last year of affordability.

    Mo e every client you can now it’s the last year to save !


    • Ron Greiner says:

      No laws need to be passed when we have a dictator in DC.

      The NCPA made no effort to inform Americans.

      The public is so uninformed that nobody will even notice.

  14. Lee Benham says:

    The PHS Act Does not cover STM so we have to change the definition of STM so we can regulate it under the PHS.

    Democracy in action.