The Affordable Care Act's premium costs are expected to increase by 20.3 percent on average in 2016, a substantial amount more than the modest 7.5 percent increase predicted by the Obama administration, according to an analysis by The Daily Caller News Foundation.
The 20 percent discrepancy appears to have occurred "because the government excluded price data for three of the four Obamacare health insurance plans when the officials issued their recent forecast claiming enrollees would face only a 7.5 percent rate increase in 2016," explains the media outlet.
The federal agency that oversees Obamacare, the U.S. Department of Health and Human Services Center for Medicare Services (CMS), only calculated price changes for the program's Silver plan and did not factor in data for the Bronze, Gold and Platinum plans, according to The Daily Caller. CMS officials said they did their calculations this way because the IRS uses the Silver plan as a "benchmark" for tax purposes.
"When data for all four plans are included, premium costs will actually rise on average 20.3 percent next year," The Daily Caller says.
By comparison, from 2014 to 2015, the Affordable Care Act's costs rose by only 2 percent, notes The Washington Post.
It's important to note that the 20.3 percent number is only the average, meaning costs in some states could increase even more.
"In Utah, for example, some enrollees in an individual plan will face a 45 percent price jump," The Daily Caller says. "In Illinois, the highest price hikes for individuals in the federal exchange will be 42.4 percent. Some insurers in Tennessee will experience a 36.3 percent price rise."
There are three key reasons for the price hikes, according to The Motley Fool. First, medical loss ratios are too high, meaning insurance companies are spending too much premium dollars on patient care relative to the total amount of premium dollars taken in.
Second, not enough young adults are signing up under the health care program, a demographic vital to Obamacare's success. Because young adults are usually healthier and less likely to require expensive medical care, their premium payments help offset the high costs insurers dole out on older patients.
And finally, the Congressional Budget Office's enrollment estimations were way off. Prior to the launch of Obamacare in 2013, the office predicted that 21 million people would be enrolled by now. Its latest estimate is that only 10 million people will be enrolled by the end of 2016.
