The health insurance marketplaces governed by the Affordable Care Act (ACA) have seen much turbulence in the past couple of years, rocked by considerable price hikes and exits of insurers. But it appears things are beginning to stabilize, even as increase in premiums is expected in 2019.
President Donald Trump has never made it a secret that he is no supporter of Obamacare. He is reported to regularly describe the affordable health insurance program “a disaster.” His administration has been taking different measures to undercut the stability of the markets.
Among the measures that the Trump administration has implemented to reduce interest in the law’s markets is reduction in the budget for organizations that help with the enrollment process. The budget for such was $63 million in 2016 but dropped to $36 million by the following year. A further cut was announced in July 2018 bringing the budget down to just $10 million.
Added to measures to make the Obamacare markets less appealing is the GOP tax-cut bill that repealed the requirement by the ACA that Americans must have health insurance or be penalized. This will come into effect from 2019.
In the light of these different actions, premiums in the law’s markets are expected to be on the higher side next year. These would not have been the case if these measures were not introduced.
However, it appears the rise in costs that is on the horizon will be nowhere near that seen in the past two years. The exact increase to be expected is not yet known.
The projected hike is with regard to the “benchmark” plans, which are used for calculating subsidies under the ACA. This means the increase may be lower after financial assistance is factored in.
Initial estimates put together by the Kaiser Family Foundation indicate that increases in premiums may range between 7 percent and 36 percent.
The Associated Press and Avalere Health, a healthcare consulting firm, estimated a 3.6 average hike in proposed or approved ACA premiums across 47 states and Washington, D.C for 2019 in an analysis of available state data. That represents a considerable drop from the level for this year, which stood at roughly 30 percent.
From all indications, federal taxpayers will bear much of the burden. Majority of the millions on the ACA program enjoy subsidies from the government on the basis of their income. The subsidies typically neutralize the effect of premium increases for such people.
Most people with Obamacare health insurance will either pay lower net premiums or pay slightly a little more.
The Trump administration’s efforts geared at disrupting the Obamacare program doesn’t seem to be achieving the intended aim of making it less appealing. The health insurers have a hand in this to an extent.
In the case of higher premiums, the insurers adopted a clever approach to passing the increases to taxpayers.
Under the ACA, people receiving tax subsidies based on their income pay a fixed proportion of what they earn for health plans and nothing more. The government covers the rest regardless of the size of the total premium.
This arrangement played well into the hand of insurers who hiked rates on benchmark plans that are used for calculating these subsidies. What this did was to enable qualified customers to get more generous plans for only slightly more or to opt for a less-generous plan by paying lower than they previously did, or even for free.
It is the same scenario that is likely to play out with increases in premium anticipated for 2019.
Higher-earning individuals lose out
Apart from tax payers who will bear the most part of the burden of increase in rates, people who earn higher incomes are going to feel the impact of the hike more as well. They will have to see to every dollar increase in their premiums.
Many people who are not eligible for financial aid due to their income have exited the Obamacare markets in large number. Estimate has it that just about 1 in every 10 customers is not qualified for financial assistance.
With the expected rise in premiums, the law’s health insurance markets look set to be even less appealing to this group. The options they have apart from paying the higher premiums will be to get a less-generous plan or exit the markets altogether.
With the repeal of the individual mandate penalty coming into effect in 2019, those not eligible for assistance should have nothing to fear should they decide to leave. But that doesn’t sound like a great option for those with serious medical conditions.
Insurers relishing the stability
Much of the upheavals and turbulence in the law’s markets heading into this year have now settled. The markets are more stable than they were last year and there is more room for profitability.
The previous premium hikes were helpful to some insurers in reversing their huge losses and even returning to profitability, according to business analysts.
The seeming mass exodus of insurers out of the Obamacare markets has cooled. It has not only stopped; some new ones are reported to be entering the market.
“The other things to note so far is that insurers are on net entering the market and not leaving the market,” David Anderson, research associate at Duke University, told Dylan Scott of Vox. “This is interesting as a sign that chaos of 2017-2018 is seen as subsiding.”
The Press Herald reports that 19 states in the U.S. will either have more insurers or see existing ones expanding into new areas. There is unlikely to be bare counties in 2019, especially considering those were filled prior to the picking of 2018 plans.
If entry by new insurers into the market is anything to go by, it is probable that more customers will be joining the Obamacare with more options now available.
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