Why Are The 2016 Obamacare Rate Increases So Large?

Eli,

Bob Laszewski, in my opinion, has been the most balanced, knowledgeable commentator on Obamacare.

In his most recent note, published in Forbes,

I have also made the argument that after two years the Obamacare enrollment is coming up way short of what it needs for us to be assured that we have a sustainable risk pool—enough healthy people signed up to pay the costs for the sick.

Instead of moderate rate increases for one more year, the big rate increases have begun. They are particularly large among the health insurers with the most enrollment—the carriers with the most data.

Of course, there are alternative views, based on slicing the data differently, like this:

Lowest-Cost Exchange Premiums Remain Competitive in 2016; Consumers may be able to keep increases small by selecting a low-cost silver option

Specifically, premiums for silver plans will increase 5.8 percent on average across the states analyzed, ranging from a 12.0 percent average increase in Oregon to a 5.3 percent decrease in Michigan. More than two-thirds (68 percent) of 2015 exchange enrollees picked silver plans.

“While recent public attention has focused on a subset of plans that filed for premium increases of 10 percent or more, these data reveal that most plans are proposing more modest increases,” said Caroline Pearson, senior vice president at Avalere. “Notably, final premiums could be even lower than those proposed.” 

The latter report notes, "Accessing these low cost plans may require enrollees to change carriers in some regions," which makes the claim of moderate (my term, "moderate," but is 5.8%  moderate in a zero % inflation economy?) rate increases suspect. It's like saying iPhone prices are falling as long as you buy the iPhone 3 with 8GB of memory.

Bill