Rates Up 22 Percent For Obamacare Plans, But Subsidies Rise, Too

The cost of health insurance under the Affordable Care Act is expected to rise an average of 22 percent in 2017, according to information released by the Obama administration Monday afternoon.

Still, federal subsidies will also rise, meaning that few people are likely to have to pay the full cost after the rate increases to get insurance coverage.

"We think they will ultimately be surprised by the affordability of the premiums, because the tax credits track with the increases in premiums," said Kevin Griffis, assistant secretary for public affairs at the Department of Health and Human Services.

The 22 percent rise reflects the average for all insurance marketplaces, both federal and state-based exchanges for which data are available. For insurance purchased through the federal HealthCare.gov exchange the rise will average 25 percent.

During a media briefing Monday, Griffis said the 2017 rates are roughly at the level the Congressional Budget Office forecast when the law was proposed. "The initial marketplace rates came in below costs," he said. "Many companies set prices that turned out to be too low."

Enrollment opens Nov. 1. For coverage effective Jan. 1, people need to pick a plan by Dec. 15. With a few exceptions, the last day to sign up for Obamacare is Jan. 31, 2017. Plans are available on HealthCare.gov and state-run exchanges.

While the average premiums on the benchmark health plans are increasing, the government says more than 70 percent of people buying insurance on the marketplaces created by the law could get a health plan for less than $75 a month for 2017. To get the best deal, people would have to pick a low-cost plan with limited benefits and take advantage of all the subsidies available.

People who already have coverage through the exchanges can often save money by switching plans, the administration said. More than three-quarters of people could save money by switching to the lowest-cost plan within the level of coverage, such as bronze or silver, that they've previously selected.

The Obamacare insurance exchanges are under strain after three major insurers pulled back from offering coverage in markets across the U.S. The administration says about 1 in 5 people buying insurance through the marketplaces will have only one company offering coverage.

It's in places like that where consumers will feel the most pain. "Where it really matters is where a big insurance company has exited and where that's going to leave just one company remaining," said Cynthia Cox, associate director of health reform and private insurance at the Kaiser Family Foundation. "For those people who live in that area, many people may have to switch plans. And they won't have much choice if they want to receive financial assistance and purchase through the exchanges."