HHS On New Mexico Health Insurance Rate Changes

HHS News:

WASHINGTON, D.C. – Jonathan Gold, press secretary at the U.S. Department of Health and Human Services, issued the following statement on New Mexico health insurance rate changes.

“Consumers in New Mexico will continue to have affordable coverage options in 2017. Last year, the average Marketplace premium among people with tax credits stayed the same at $127 per month, despite reports based on preliminary rate filings predicting increases of ‘51 percent’.

“People in New Mexico understand how the marketplace works, and they know that they can shop around and find coverage that fits their needs and budget. In fact, last year more than 50 percent of them did exactly that by switching plans to save money.

“In addition, the vast majority of consumers in New Mexico qualify for tax credits that reduce the cost of coverage below the sticker price. Today’s announcement is just the beginning of the rates process, and consumers will have the final word when they vote with their feet during Open Enrollment. ”

Background

Proposed rates aren’t what consumers pay. While today’s filings show an a proposed rate increase in New Mexico, a report from the U.S. Department of Health and Human Services demonstrates that proposed premium changes from preliminary rate filings do not capture what Marketplace consumers actually pay. In New Mexico, the average Marketplace premium among people with tax credits stayed the same at $127 per month, despite reports based on preliminary rate filings predicting increases of “51 percent.”

Most people receive tax credits and can buy a plan for less than $75 per month.

  • 68 percent of Marketplace consumers in New Mexico receive tax credits, which are designed to protect consumers from premium increases and help make coverage affordable.
  • Tax credits increase if the cost of the second lowest-cost silver, or benchmark, plan goes up. So if all premiums in a market go up by similar amounts, 68% of Marketplace consumers in that market will not necessarily pay more because their tax credits will go up to compensate. Average rate increases reported with the preliminary rate filings do not account for tax credits.
  • For 2016 coverage, 50 percent of customers in New Mexico had the option of selecting a plan with a premium of $75 or less per month after tax credits. 
  • Shopping: The ACA Marketplaces helps consumers shop around for the best deal.
  • Prior to the ACA, it was nearly impossible for consumers to compare plans and shop around easily – and many Americans went uninsured because they couldn’t afford insurance or had pre-existing conditions. Those who did have insurance in the individual market were often trapped in the plan they had, since people with even small health problems could be denied coverage or charged an exorbitant price if they tried to switch plans or issuers.
  • Today, Marketplace consumers in New Mexico can purchase any available plan regardless of health conditions, and tools such as the doctor lookup and out-of-pocket cost calculator help them find the plan that meets their needs. Last year, 58 percent of returning Marketplace consumers in New Mexico switched plans. They saved an average of $552 annually.

Prior to the Affordable Care Act, plans were typically inferior and excluded services like maternity care, or even routine services like prescription drugs. Plans also often charged a higher premium, or denied coverage altogether, to consumers due to a pre-existing condition. Now, all consumers have the option to purchase quality, affordable coverage.

This is a big deal for as many as 862,000 people in New Mexico with a pre-existing condition.

Health insurance is clearly something people in New Mexico like, want, and need: 54,865 people signed up for 2016 coverage – more than ever before.

Both Marketplace and non-Marketplace consumers continue to benefit from the low health care cost growth of recent years.

Marketplace rates remain well below expectations when the law was passed. Marketplace rates for 2014 came in about 15 percent below Congressional Budget Office (CBO) projections in 2010.  Better-than-expected Marketplace premiums are due in large part to lower-than-expected economy-wide health care cost growth and other efficiencies.

For the half of Americans who obtain health insurance through an employer, premiums for family coverage grew by an average of  5 percent per year from 2010 to 2015 – compared with about 8 percent per year from 2000 to 2010. Premiums grew at an even slower 4.2 percent rate in 2015. If premium growth since 2010 had matched the average growth rate over the prior 10 years, the average family premium would have been almost $2,600 higher in 2015.

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