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Why Obamacare Premium Spikes Aren't Hitting Most People's Wallets

Kaiser Health News

Health insurance premiums have been rising on the Obamacare exchanges, and North Carolina had some of the country's biggest increases this year. But according to a recent federal report, those increases made very little difference in what consumers actually pay.

Premiums went up an average of 23 percent for North Carolina's benchmark plan this year, according to federal data.

But that's basically a sticker price that very few people actually pay, here or across the country. That's because roughly 90 percent of people on the exchange qualify for a federal subsidy.

"What is really important here is subsidies grow with the premiums," says Richard Frank, chief economist for the U.S. Department of Health and Human Services.

His department ran the numbers recently and found that even though the sticker price spiked, what North Carolinians pay only rose 3 percent, which equals a couple dollars. 

"If you have a lot of lower income people facing some significant premium increases, they're going to get a large increase in their subsidy, and so that's what could account for that difference," he says.

In essence, the federal government picks up more of the tab.

Even with that, the Congressional Budget Office estimates Obamacare's insurance provisions will cost the federal government less over the next few years than it had originally projected. The nonpartisan researchers say that's because fewer people than they expected are signing up on the exchanges, and because the overall growth of health care costs has been slowing.