Several important conclusions emerge from the latest statistics about Affordable Care Act premiums, issued Monday on the eve of open enrollment for 2018 plans, which begins Wednesday.
First, gross premiums will rise substantially for next year and enrollment is likely to fall, mostly because of Trump administration efforts to sabotage the law. Second, millions of Americans will be insulated from those increases thanks to the administration's profound ignorance about how the law works. Because government subsidies will be higher in 2018, many will pay less for equivalent coverage than they pay this year—in some cases, nothing.
The group that will be most vulnerable will be households ineligible for subsidies, typically because they're earning more than 400% of the federal poverty level ($98,400 for a familiy fo four this year). They'll bear the brunt of the gross premium increases. That's about 16% of total ACA enrollments, or as many as 2 million people.
Finally, it seems that President Trump himself doesn't know anything about these points, or care. On Sunday morning, he issued a tweet crowing "as usual, the ObamaCare premiums will be up (the Dems own it)." He promised to "repeal & replace" the Affordable Care Act "soon after Tax Cuts!"
The danger created by Trump administration policy is that it feeds confusion among the ACA's beneficiaries, in part because the administration has cut information and outreach services to the bone.
"The availability of zero-dollar coverage or ultra low-cost plans has a huge impact on consumer decision-making," says Josh Peck, a former chief marketing officer for healthcare.gov in the Obama administration. "The question is, will consumers know they exist?" Peck made his comment at a press forum sponsored by the liberal Center for American Progress.
The center estimates that initial enrollment in ACA individual plans for 2018 could fall by more than 1 million from the 12.2 million otherwise expected, mostly due to Trump administration policies that have included slashing the open-enrollment period in half. This year it runs from Nov. 1 to Dec. 15 on the federal exchange. Last year's deadline was Jan. 31, but many potential customers won't know of the change because the government won't advertise it widely. Several state exchanges, including California's, will retain the former three-month schedule.
The first two cover premiums only in the 35 states that rely on the federal government's insurance exchange, healthcare.gov. Since Gaba's sample is more comprehensive, let's examine his findings first. He calculates a weighted average premium increase of about 29%-30% (his figures are weighted for the number of enrollees in each plan). Most of the increase, Gaba reckons, can be traced to specific Trump actions.
About 13-14 percentage points are due to the administration's threat to cancel the cost sharing reduction reimbursements due to insurers — a threat on which Trump made good on Oct. 12. The threat forced insurers to raise premiums to cover their potential losses from having to pay for reductions in low-income customers' deductions and other out-of-pocket expenses themselves, without being paid back by the government. An additional three to four percentage points in the average increase was charged by insurers to compensate for the prospect that the administration wouldn't stringently enforce the individual mandate, thus allowing younger, healthier customers to stay out of the risk pool.
The Kaiser Family Foundation found that among healthcare.gov states, gross premiums — that is, before premium subsidies are applied—will increase an average 17% for the lowest-cost bronze plan and 35% for the lowest-cost silver plan. Why the big jump in silver? It's because many states allowed insurers to load the premium increase resulting from the cost-sharing reduction threat onto silver plans, which are the benchmark for premium subsidies.
As a result, "enrollees will see much higher premium tax credits," the foundation says. Gold plans, which are better than silver plans, will be "more easily attainable," and some bronze plans may even work out to be free, after the subsidy is applied.
The Deprtment of Health and Human Services acknowledged as much in its report on 2018 premiums issued Monday. The report noted that the average monthly premium for the silver benchmark plan increased 37% for a typical 27-year-old, to $411 a month. The average subsidy, however, will increase by 45% — to $555.
As a result, net premiums will be lower for millions of enrollees. The HHS report revealed that for a 27-year-old with household income of $25,000, the actual premium cost for a benchmark silver plan will fall to $138 next year from $142 in 2017. For a family of four with household income of $60,000, the actual premium will fall to $397 from $407.
The percentage of enrollees who could find a health plan for less than $75 a month will rise next year to 80% from 71%, especially if enrollees shop around. As it happens, the administration removed that observation, which was part of last year's premium report, from this year's edition, without explanation.
This year's report emphasized that insurers continued to pull back from the exchange market, with 132 issuers in 2018, compared with 167 in 2017. Eight states will have only one insurer in the individual exchange market— Alaska, Delaware, Iowa, Mississippi, Nebraska, Oklahoma, South Carolina and Wyoming. But most of those states have exhibited open hostility to the ACA, discouraging insurers.
Barring Trump policies, the Obamacare market would continue to stabilize, according to a survey by Matthew Fiedler of the Brookings Institution. "Insurers were on track to break even or make modest profits on ACA-compliant individual market policies in 2017, on average," Fiedler wrote, "before the Trump Administration's decision to end cost-sharing reduction payments." He calculated that premium increases for 2018 would have been in "the mid-to-high-single digits" if not for "a range of threatened and actual changes in federal policy."
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