Expect an Obamacare rate hike in 2015

The average New Yorker faces at least a 13 percent increase on health insurance premiums in 2015, initial proposals suggest. New York’s largest insurers want hikes of 15 to 20 percent.

Insurers have been processing the more than 8 million enrollees from Healthcare.gov and various state exchanges to determine next year’s premiums. Companies participating in New York’s exchange released their estimates last week, poking holes in some pro-Obamacare talking points.

Last year, President Barack Obama claimed Empire State premiums proved his law was working. Since 1993, Obamacare-like state laws—without an individual mandate to include healthier people—produced annual premiums $1,000 higher than any other state. Prices on New York’s individual market for 2014 were reportedly as much as 50 percent lower than before.

But those decreases are being wiped away by next year’s proposed increases, a trend showing up across the country. The largest insurers in each state are now asking for rate hikes, often in the double digits, according to The Wall Street Journal. Small competitors with few enrollees or who priced cautiously for 2014 are the only ones lowering prices.

Overall, at least a dozen states have released 2015 estimates, and proposals vary widely depending on the plan and the provider. Some insurers in Maryland proposed 30 and 23 percent increases, while others proposed double-digit decreases.

Liberal analysts say the increases are less than expected given that many people saw premiums double during the past several years. Conservatives, though, point to Obama’s promise that healthcare costs would decrease by $2,500 for the typical family. Beth Leibson, a Manhattan resident, told The New York Times the proposed 28-percent increase for her plan would be the largest one-year hike she has ever faced.

One reason for higher prices is an older and less healthy risk pool. Blue Cross Blue Shield of North Carolina wanted 50 percent of its enrollees to be younger than 34, but only 32 percent fell into that category. Those young enrollees had higher rates of depression, diabetes, and other health problems than the group as a whole.

And due to the law’s minimum coverage standards, one of the only options insurers have to keep prices lower is to narrow networks. California regulators have pressured insurers to expand limited networks, which doesn’t bode well for future premiums.

Enrollees receiving heavy subsidies may not see much of a change. Premiums are limited to a percentage of enrollees’ income, so the government could end up covering some consumers’ hikes. But everyone with individual insurance will feel at least a part of the premium increase pain. And the people the law was designed to help the most—those too rich for government assistance but too poor to afford insurance—are likely to suffer the most.

Insurers will continue releasing their proposals throughout the summer. State health regulators must approve the rates, so official 2015 premiums will start becoming more clear in August. The next open enrollment period begins in November.

Many analysts say the true test of the Affordable Care Act will come in 2017 when crucial exemptions and market distortions end just in time for a new president to enter the White House.

Programs keeping prices artificially low by compensating insurers who lose money or who have the least healthy risk pools will expire. On the consumer side, those whose plans have been grandfathered in or who had their non-compliant plans extended will be faced with getting new, more expensive plans or paying penalties.