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Obamacare 'silver' lining: Prices of plans to drop

Dan Mangan
Andrew Harrer | Bloomberg | Getty Images

Prices for benchmark Obamacare insurance "silver" plans are set to drop an average of 0.8 percent next year in 16 major cities-while the lowest-cost "bronze" plans in those same areas are looking at a 3.3 percent rise, a new analysis released Friday found.

The report by the Kaiser Family Foundation also suggests that because of variation in price changes, current customers should shop around to make sure they're getting the best possible deal before re-enrolling this winter.

Many of those people will be automatically re-enrolled in their current Obamacare plan unless they select another one when open enrollment resumes Nov. 15.

"You could end up paying more if your insurer is no longer offering one of the low-cost plans, so you should look carefully at your options," said Larry Levitt, Kaiser's senior VP.

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Still, Kaiser foundation president and CEO Drew Altman noted that 2015 premium prices, overall, are not dramatically higher than prices were for the first year of individual insurance plans sold through the health-care exchanges.

"There is variation, but so far, premium increases in year two of the Affordable Care Act are generally modest," said Altman, whose foundation looked at the prices that would be paid by a 40-year-old non-smoker in the 16 cities.

"Double-digit premium increase in this market were not uncommon in the past," he noted.

Kaiser Family Foundation also noted the federal budget will benefit from the average 0.8 percent decrease in prices of the second-lowest-cost "silver" plans, which are used to determine the amount of government subsidies received by all enrollees in a certain income range.

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"If early trends hold and average premiums for the benchmark silver plans decline across the country, the federal government could end up paying out less than expected in tax credit subsidies overall for 2015," Kaiser said in a summary of the report. "Lower benchmark silver plan premiums would mean savings for taxpayers."

The health-care exchange plans' metal names-bronze, silver, gold and platinum-reflect both their relative prices, and how much health expenses they cover.

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Generally speaking, bronze plans, which cover about 60 percent of an enrollee's health expenses on average, are the least-expensive plans sold through the health-care marketplace. Silver plans, which cover about 70 percent of health expenses, are the second-least expensive. A given insurer may offer multiple plans of different designs in a given metal tier, others may just have a single offering in a tier, while others may not have a plan on sale in a particular tier.

The vast majority of the 8 million enrollees on the exchanges this year bought either a bronze or silver plans. Sixty-five percent of enrollees opted for a silver plan, while 20 percent chose a bronze plan.

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Most Obamacare enrollees-85 percent of them-received a discount on their monthly premiums because they were eligible for subsidies from the federal government due to their low or moderate incomes.

The dollar value of those subsidies is linked to the price of the second-lowest-cost silver plan in a given insurance sales area. Because of their importance to determining subsidies, benchmark plan prices are closely watched.

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Kaiser's analysis compared the prices of the benchmark plans for this year with the prices of those plans for 2015. In some cases, the benchmark for 2015 is a different plan than for 2014 because of price changes by insurers.

The analysis found a relative wide gap between price cuts and increases of benchmark plans.

In Denver, a 40-year-old nonsmoker who earns $30,000 annually is looking at a 15.6 percent price cut if he continues to buy the benchmark plan there next year. His Humana plan was the benchmark at $250 per month this year, but the benchmark plan next year will be issued by Colorado Health insurance Co-op, which is offering it at a price of $211 per month.

But the difference in what that customer actually pays in premiums himself after receiving a subsidy would be almost negligible: $209 in 2014, and $208 in 2015.

In Nashville, Tenn., the same person would be faced with a 8.7 percent increase in their monthly premiums if they again opted to buy the second-lowest-cost silver plan next year. Blue Cross/Blue Shield of Tennessee sold the benchmark plan this year for $188 per month, but next year, the benchmark plan would be sold by Community Health Alliance, which will sell it for $205 per month.

That person would not be eligible for subsidies there because the premiums in that are were set so low, Kaiser noted.

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-By CNBC's Dan Mangan