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Double-digit premium increases predicted

Double-digit premium increases will likely be seen this year because of Obamacare, according to an analysis from Avalere Health.

Many in the industry had expected the age mix of exchange enrollees to drive up premiums but Avalere said that wasn’t the case. Instead, the consulting firm this week blamed the increasing cost of medical care, utilization of services and new medical technology — all of which “make it likely that exchange plans will need to increase their prices.”

Premium increases will vary geographically, and will depend in part on the competitiveness of provider markets, it said.

The firm’s findings about increasing premiums is not a new prediction, echoing other reports about rising health costs for consumers. Last month, a survey of brokers by Morgan Stanley health care analysts concluded that health premiums are rising so sharply that, in some states, increases are in the triple-digits.

Avalere research also found that the federal government will “bear a disproportionate burden of premium increases” in states with high rates of subsidized enrollees. Nationwide, 85 percent of exchange enrollees are receiving financial assistance.

“This ranges from 16 percent in Washington, D.C., to 94 percent in Mississippi,” Avalere said. “While this could dampen the need for plans to price premiums competitively, it could also lead HHS to consider a more active purchasing approach over time.”

Avalere Health’s analysis dove into HHS enrollment data. Earlier this month, the Obama administration announced that 8 million people had enrolled in the exchanges nationwide.

In other findings, researchers said enrollment for young adults — ages 18 to 34 — is not uniform across the country, and they said success of PPACA will depend on making sure young adults in every state continue to enroll.

Hispanics continue to lag in enrollment despite the group's high uninsured population, and women are outpacing men in exchange sign-ups, the analysis found.

Researchers also said they found, unexpectedly, that individuals across the age spectrum are selecting plans at different metal levels at approximately the same rates.

“One reason may be that young families with children may be more likely to buy a plan in a higher metal level,” Avalere said. “While most enrollees have and will continue to enroll in silver or bronze plans, health plans will learn more about the risk profile of exchange enrollees and what motivates people to purchase more generous coverage.”

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