ACA & The New Normal

Modest Changes in 2016 Health Insurance Marketplace Premiums and Insurer Participation

A 6% increase nationwide, compared to 4% for employer-based plans

by Jon R. Gabel, Heidi Whitmore, Adrienne Call, Matthew Green, Rebecca Oran and Sam Stromberg

New research from The Commonwealth Fund. Visit

Our updated analysis of the Affordable Care Act’s marketplace health plans finds that premiums increased 6 percent nationwide for all plans and benchmark silver plans in 2016. (By comparison, premiums in employer-based plans rose 4 percent in 2015—the most recent year available—and increased annually by 7.3 percent, on average, between 2000 and 2015.1)

We also found that the number of carriers participating in local markets declined slightly: about 6 percent in urban areas, 7 percent in suburban areas, and 3 percent in rural areas.

Other key findings include:

• Wide state-to-state variations, ranging from premium increases of 37 percent in Tennessee to reductions of 8 percent in Texas.

• Double-digit increases in premiums in 21 states and declines in seven states and the District of Columbia. Looking at the nation’s three largest states in terms of population: California had an increase of 4 percent while Florida and Texas had premium decreases of 1 percent and 8 percent, respectively.

• A slower rate of increase in higher-cost urban areas, such as the District of Columbia, than in suburban and rural areas. These differences may reflect a higher level of insurer competition in urban areas.

Our study data show changes from the 2014–15 and 2015–16 plan years and are weighted to reflect the population distribution across marketplace rating regions. All states and the District of Columbia are included for 2016, with only one state (New York) excluded for 2015.2 Premiums presented are for a 40-year-old non-smoker. (Single and family premiums are available in an interactive map.)

It’s important to note that most marketplace enrollees qualify for premium subsidies, which largely protect them from this year’s premium increases. The U.S. Department of Health and Human Services reports that in states using, 83 percent of enrollees are receiving financial assistance to pay their 2016 premiums in 2016. The average subsidy covers 72 percent of the premium for those eligible for the tax credits. After tax credits the average premium is $113 per month.

Out-of-pocket spending is also managed by reductions in cost-sharing amounts available to households earning up to 250 percent of the federal poverty level ($29,425 for an individual and $60,625 for a family of four), but only if they enroll in a silver plan. Households earning 100 to 200 percent of poverty income receive cost-sharing reductions that give the plan a value comparable to that of a gold or platinum plan.


Changes in Premiums
The 2016 health care marketplace saw a larger overall average increase in premiums than in 2015 (6 percent versus no increase in 2015) (Exhibit 1). Double-digit increases in average premiums occurred in 21 states in 2016, versus 12 states in 2015. Conversely, seven states and the District of Columbia witnessed a slight decline in 2016 premiums, compared with 14 states in 2015. (See Exhibit 1 for nationwide premiums for each of the plan levels.)

The range of average premiums between states for silver plans was extremely large in 2016, with the lowest premium averages in the District of Columbia ($267) and the highest occurring in Alaska ($783). Premiums for silver plans increased by double digits in 20 states in 2016, compared with eight states in 2015. Only seven states and the District of Columbia saw silver premiums fall in 2016, compared with 17 states in 2015.

Changes in Benchmark Silver Plans
Premium subsides are calculated based on each state’s second least-expensive silver plan, known as the “benchmark” silver plan. Nationally, the average increase for benchmark silver plan premiums was 6 percent in 2016, up from a 1 percent increase in 2015 (Exhibit 2). Twenty-three states saw double-digit increases in 2016 in benchmark premiums, up from two states in 2015. Six states experienced a double-digit reduction in benchmark silver premiums in 2015, while only Florida had a double-digit decrease this year.

Across the nation, all types of geographic areas experienced increases in 2016 benchmark silver premiums, but rural areas saw the largest average increase at 11 percent. Premiums in suburban areas rose by 8 percent and in urban areas by 4 percent. (See Exhibit 2 for average premium rates.)

It’s important to note that most marketplace enrollees qualify for premium subsidies, which largely protect them from this year’s premium increases

Average Premium by Plan Carrier
After reviewing premium changes for four types of insurers—Blue Cross Blue Shield; national commercial insurers; Medicaid; and CO-OPs—we found that Medicaid and CO-OP plans experienced the largest 2016 increases, with both carrier types’ premiums rising by 12 percent. In 2015 CO-OP and Medicaid premiums fell by 8 and 13 percent, respectively, so the 2016 increases bring CO-OPs in line with other carriers (Exhibit 3). Blue Cross Blue Shield had a 7 percent increase and national commercial insurers’ premiums rose by 4 percent in 2016, both higher increases than seen in 2015. (See Exhibit 3 for national average premium amounts.)

Number of Carriers by Rating Region
There was a slight decline in the average number of carriers competing per rating region in 2016 (Exhibit 4). Nationally, urban areas experienced a 6 percent decline and suburban areas experienced a 7 percent decrease in the number of carriers in 2016, while rural areas experienced a 3 percent reduction. The largest increases in the number of 2016 urban carriers occurred in Kentucky, with four carriers entering the market, while Arizona lost four carriers in the urban market, 6.6 in the suburban market, and 4.5 in the rural market. Massachusetts experienced the largest increase in the number of 2016 suburban carriers (1.4). Colorado experienced the biggest increase in 2016 rural carriers, with 3.6 carriers entering the market.3

Behind the Numbers

Why were premium increases larger this year? In 2014, insurers set premiums 16 percent lower than the Congressional Budget Office projected.4 And actual medical claims and administrative expenses exceeded premium revenues in 2014 for 64 percent of insurers.5 However, insurers set premium rates for 2015 just months after 2014 enrollment began, so they had inadequate medical claims data to forecast expenses. Now insurers have had a full year of experience to forecast expected claims expenses, which are the basis for setting premiums.

Additionally, factors that constrained premiums in 2015 had the opposite effect in 2016. Nationwide, the number of carriers competing in a rating area increased 25 percent in 2015, but declined 6 percent in urban areas in 2016. Medicaid and CO-OP plans lowered premiums by 13 percent and 8 percent, respectively, in 2015, then increased them by 12 percent in 2016, although they are still slightly less costly than other plans. Moreover, more than one-half of the low-priced CO-OPs exited the market in 2015.

Early enrollment statistics for 2016 indicate a larger marketplace enrollment, with a larger percentage of members under the age of 35, which may constrain future premium increases. Overall health care prices are rising by little more than 1.0 percent per year.6 Yet, specialty drug costs are rising and CO-OP plans continue to exit the marketplace. And the reinsurance program, which encouraged insurers to price aggressively, will have about one-half of the funding available in 2016 that it had in 2014.7 Thus, future premiums are not easy to predict.

With support from The Commonwealth Fund, NORC at the University of Chicago is in its second year of building a national database of federally-facilitated marketplace and state-based marketplace health plans. The database includes plans across a variety of urban, suburban, and rural rating region areas in each state to provide a more complete picture of market conditions. This database also compiles data on premiums, deductibles, out-of-pocket limits, and other benefits data, for all levels of coverage.



1 Kaiser Family Foundation, Employer Health Benefits Surveys, 2000–15.
2 As a result, all 2015–16 changes presented in this post exclude New York data for plan year 2016, while any 2016 cross-sectional estimates include New York.
3 Data were collected for up to two rating areas per stratum (urban, suburban, and rural).
4 T. Spiro and J. Gruber, “The Affordable Care Acts Lower Than Projected Premiums Will Save $190 Billion,” Center for American Progress, October 23, 2013.
5 B. Herman, “Feds Short Insurers $2.5 Billion on Exchange Plan Losses,” Modern Healthcare, October 1, 2015, and A. Mathews, “Health Insurers Struggle to Profit From ACA Plans,” The Wall Street Journal, November 1, 2015.
6 Altarum Insitute, “CSHS Health Sector Economic Indicators Briefs,” December 2015.
7 Center for Medicare and Medicaid Services, “Reinsurance, Risk Corridors, and Risk Adjustment Final Rule.”