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Premiums up 6 percent on ACA exchanges, McKinsey finds

Premiums for HMOs, narrow networks increase less

Despite an influx of new carriers and plans, premiums for health insurance plans sold on Affordable Care Act exchanges rose 6 percent between 2014 and 2015, according to a report from the McKinsey Center for U.S. Health System Reform.

In all, 125 products are available on public exchanges for 2015, compared to 98 last year. The average number of plans available in any one U.S. county is 40, compared to 31 last year.

However, McKinsey said, the cost of these plans has risen. If all exchange enrollees were to renew the insurance they purchased in 2014, the vast majority--85 percent--would have higher premiums. That reinforces the message from the Department of Health and Human Services that consumers should consider shopping around for a new insurance plan instead of automatically renewing. All told, if everyone renewed, average premiums would go up 9 percent--but if 2014 enrollees shopped for a new plan, three-quarters would find one with a better premium than if they just automatically renewed.

In most cases, the premium increases are highest among last year's lowest-priced silver plans. Insurers have raised silver plan premiums to make up for under-priced exchange plans in 2014, FierceHealthPayer previously reported.

At the same time, McKinsey said, the gap between the lowest- and second-lowest-priced silver plans has narrowed. What's more, increases were smaller for HMOs (2 percent) than for PPOs (9 percent). The same was true for narrow networks, which saw a 4 percent premium increase compared to an 8 percent increase for broad networks.

Competition seems to be keeping ACA plan premiums from increasing too much, especially from CO-OP plans, insurers who specialize in Medicaid and other new entrants to the "traditional" insurance marketplace. As a result, McKinsey said consumers face a wider range of premiums as opposed to a narrower one.

According to the New York Times, though, this seems to suggest that "insurers, established or not, have not yet figured out what they should be charging and what consumers want to buy."

For more:
- read the McKinsey report (.pdf) and summary
- here's the Times article

Related Articles:
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With more plans available, prices rising, HHS urging exchange customers to shop around
Competition helps keep a lid on ACA plan premiums
Insurers raise 2015 premiums to make up for under-priced exchange plans last year
Study: Individual market customers pay higher premiums after ACA
3 reasons premiums will keep increasing