Obamacare premiums rose 8% in last enrollment, far less than predicted

Marketplace premiums rose by 8 percent last year, well below the double-digit rise predicted by some observers of Obamacare, according to a Department of Health and Human Services report released Tuesday.

Marketplace observers last year suggested consumers would see premiums in 2016 rise by a double-digit percentage, according to the report. A McKinsey analysis based on rate filings estimated that median premiums would rise by an average of 10 to 15 percent, the HHS report said.

This didn't happen due to several factors.

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For starters, insurers may up the price of premiums but consumers who shop around for the best deal tend to get the coverage that offers the lowest premiums, the report said.

The average Healthcare.gov consumer has a choice of 46 health plans, the department said.

During open enrollment this year, 6.4 million people, or 67 percent of Healthcare.gov consumers, selected a new plan for 2016.

For returning consumers, compared to what they would have paid had they remained in their 2015 plan, switching plans saved them an average of $42 per month in premiums, the department said.

Among the roughly 85 percent of Healthcare.gov consumers with premium tax credits, the average monthly net premium increased by only $4 from 2015 to 2016, according to the report.

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Tax credits also reduce the price of premiums. The average monthly tax credit amount in 2016 is $290 and reduces a consumer's premium by 73 percent, HHS said. The average net premium in 2016, taking into account tax credits, is $106 per month, the report said

The federal government ties tax credits to premiums, meaning that if the premiums for all plans in an area rise similarly, the increase is essentially fully offset by a higher premium tax credit.

Each spring, issuers file proposed rates with federal and state regulators.

Rates then undergo review before being finalized in the fall, prior to the annual Health Insurance Marketplace Open Enrollment Period.

Thirty-eight states used the Healthcare.gov platform in 2016.

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Insurers do not account for premium tax credits in their premium changes, HHS said.

Also, in reporting their rate announcements, insurers assume a scenario in which no consumer leaves the marketplace, no new consumers enroll, nobody switches plans, and no new plans are offered, according to the report.

This means that the average reported rate changes do not accurately represent the changes in the premiums consumers will actually pay, the report said.

Twitter: @SusanJMorse