Obamacare premiums expected to rise: What individuals should know

Individuals across the country that utilize Obamacare for coverage should be prepared for health care premiums to increase in the next year. In an interview with Morning Consult, Marilyn Tavenner, current president and CEO of America's Health Insurance Plans (AHIP), predicted the rise for 2017.

"I've been asked, what are the premiums going to look like?" Tavenner said. "I don't know, because it also varies by state, market, even within markets. But I think the overall trend is going to be higher than we saw previous years. That's my big prediction."

Let's take a closer look at what will cause this upsurge and what effect it will have in the upcoming election year:

The causes
Health care premiums don't just go up based on the weather. Instead, there are many factors that account for the surge, including general trends in medical costs, pharmaceutical prices and Obamacare market shifts. Medical spending has increased year by year and drug costs have risen also. The last cause for the premium boost is due to the changes in Obamacare regulations that have – and will continue to occur – moving forward. When the Affordable Care Act was first implemented, certain concessions were put in place to smooth the transition, such as risk mitigation actions. A few of these programs will end in 2017, Tavenner continued, leading insurers to be faced with certain insecurities regarding their coverage and the stability of the marketplace overall.

Elements including increased medical spending and pharmaceutical costs impact premiums.Elements including increased medical spending and pharmaceutical costs impact premiums.

Difficult predictions
Insurers rely on consumer data to make their forecasts for the next year's premiums. The goal of Obamacare – allowing people to shop around for a plan and coverage that meets their needs – makes these predictions more difficult. It's challenging for insurance companies to foresee what their customers will utilize in the next year, making the premium anticipation more troublesome. In addition, exchanges tend to have sicker employees who enroll – as they didn't receive coverage through their employers or were previously denied insurance before Obamacare.

The conversation still continues, however. Insurers have started submitting their open bids to regulators. These parties will review those suggestions before they're finalized in the fall. Usually, the decided-upon premium rate is lower than the initial bids. The state of California, however, predicts their premiums could increase up to 8 percent, according to Kaiser Health News.

"Opening rates that folks file are certainly not the impact that consumers will feel, and you should take those with a big grain of salt," said Dr. Mandy Cohen, the chief operating officer for the Centers for Medicare and Medicaid Services.

The election year
As insurers, companies and consumers alike begin to think about their medical costs for the next year, they also have to factor in the changes proposed by presidential candidates.

Republican frontrunner Donald Trump plans to repeal Obamacare, and specifically points to eliminating the individual mandate, according to U.S. News and World Report. This provision requires all Americans to get health insurance or receive a penalty. Trump's plan offers block grants to states so they could decide the specifics of their Medicare policy. The businessman's seven-point plan also promotes the ability for individuals to deduct coverage premiums from their tax returns, greater transparency regarding prices of procedures and free markets for Americans to buy prescription medication, among others.

"Presidential hopefuls have their own ideas for Obamacare in the future."

Each has outlined their plans for Obamacare should they become president. Clinton has supported the healthcare initiative. She has proposed revisions to the program, including the creation of a tax credit for people whose out-of-pocket costs total more than 5 percent than their income.

Sanders has proposed replacing private health insurance with a universal health care system – in which the government pays the bills, according to NPR. He also wants to expand Medicare to cover more Americans as he aims to transition to a single-payer health care program.

It's important for people utilizing Obamacare to be aware of these expected increases to their insurance premiums. With advanced planning, these employees won't be surprised by the additional costs and are able to budget correctly.