Federal spending on Obamacare premiums is set to increase by nearly $10 billion next year as prices rise, according to a new estimate.
The Obama administration previously reported that Obamacare premiums for the 2017 coverage year would rise by an average of 22 percent for the second-cheapest silver Obamacare plans. Some regions will see price hikes of as much as 50 to 70 percent.
However, not all Obamacare customers will feel the brunt of the hikes as any tax subsidies rise alongside them. But that does mean more federal spending, to the tune of $10 billion, or a 31 percent increase, from 2016 to 2017, according to an estimate from the Center for Health and Economy.
Overall, the federal government spent $32 billion in 2016 on premium tax credits meant to pay down the cost of health premiums.
The total enrollment in Obamacare in 2016 was about 11 million people, about 9 million of whom got tax credits, the center said.
The nonpartisan think tank looked at individual market plans that are offered on the federal exchanges. The center looked at silver plans for 50 states, as silver plans are the middle tier of Obamacare plan choices and the most popular.
It also used the premium for a 27-year-old non-smoker and calculated the premiums for a married couple of 27-year-olds who have two children.
“After differentiating premiums by age and location, we then use the 2017 income contribution scale and along with the 2017 federal poverty guidelines for calculating the premium subsidy,” the center said.
The increases in premiums were attributed to a mix of issues that included a lack of competition in several states. Major insurers UnitedHealth and Aetna pulled out of a majority of their Obamacare exchanges for 2017 after experiencing major losses.
Another issue was Obamacare plans were generally underpriced when the marketplaces started in 2014. Experts say that the prices were rising for 2017 in an attempt to correct the marketplace.
