The uncertainty surrounding the Trump administration's oversight of the Affordable Care Act, or ACA, is expected to drive healthcare insurance premiums up significantly for many Americans, according to a new analysis.
Healthcare insurers in 15 of 21 major U.S. cities where ACA plan rate filings are publicly available for so-called silver plans — one of four metal categories, which has historically been the most common choice of the government-run marketplace — expect to hike their premiums by double digits in 2018 largely due to that uncertainty, the nonpartisan, nonprofit Kaiser Family Foundation reported Aug. 10.
The vast majority of insurers included in the analysis cited the concerns they had over the mixed signals the Trump administration has sent on whether it would enforce the ACA's individual mandate — the provision that requires eligible Americans to buy healthcare coverage or pay a tax penalty — as a factor in estimating their rate increases for 2018.
President Donald Trump's threats to halt the cost-sharing reduction payments, which help cover deductibles and copayments for low-income Americans enrolled in the ACA plans, also have led insurers to factor in the increases into their premiums for 2018, Kaiser reported.
Other companies said that if they do not receive more clarity or if cost-sharing payments stop, they plan to either refile with higher premiums or withdraw from the ACA market, the analysts said.
Of the 21 cities, the highest proposed increase in the unsubsidized second-lowest silver plan would occur in Wilmington, Del. There the premium would jump as much as 49% to $631 from $423 a month for a 40-year-old nonsmoker, before accounting for the ACA's tax credit that most enrollees in that market receive, the Kaiser analysts said. Rates for Americans in that group in Albuquerque, N.M., would rise 34%, to $346 from $258, while in Richmond, Va., premiums are expected to go up as high as 33%, to $394 from $296.
Other cities with significant silver plan premium increases include Seattle, 29%; Boise, Idaho, 27%; Baltimore, 25%; Philadelphia, 23%; and Nashville, Tenn., 21%.
Some insurers blame a significant portion of their rate increases on the uncertain status of how the Trump administration will handle the individual mandate and cost-sharing payments.
CareFirst BlueChoice of Maryland said 20% of its 45.6% expected average rate increase was due to the hazy future of the individual mandate, while CareFirst BlueChoice of Virginia blamed that uncertainty for almost all of its increase — 20% of the 21.5% hike.
The cost-sharing payments also weighed heavy for several companies, particularly PacificSource Health Plans of Idaho, which reported 23.2% of its anticipated 45.6% increase was due to that concern. Two other Idaho insurers also cited the ambiguity over the cost-sharing payments for their significant rate swells: 20% of the 45% increase for SelectHealth and 17% of the 25% leap for Mountain Health Co-op.
The Kaiser analysts noted that the rates are still being reviewed by regulators and may change. Rates and participation are not locked in until late summer or early fall. Insurers must sign an annual contract by Sept. 27 in states using the ACA's Healthcare.gov marketplace.
Urgent, but not a crisis
Because most of the ACA marketplace plan enrollees receive tax credit subsidies, they will generally be protected from premium increases, although they may need to switch plans in order to take full advantage of the tax credit, the Kaiser analysts pointed out.
"Ultimately, most of the burden of higher premiums on exchanges falls on taxpayers," they said.
But the Americans with middle and upper-middle incomes buying their own coverage off the marketplace are not protected by subsidies and will pay the full premium increase, switch to a lower level plan or drop their coverage, according to Kaiser.
About 84% of the ACA marketplace enrollees, or about 8.7 million Americans, receive premium subsidies and are insulated from the expected premium hikes, but 6.7 million — the ones who buy ACA-compliant plans inside or outside the exchanges and are not subsidized — "will feel the full brunt of premium increases," Drew Altman, president and CEO of the Kaiser Family Foundation, wrote in an Aug. 10 op-ed in Axios.
"They'll be hit if the uncertainty is not resolved and the rates do not come down before they are finalized," Altman said. "Dealing with this uncertainty is an urgent situation, particularly since it may result in some counties having no insurers at all, as well as coverage that is unaffordable for millions of Americans."
But the situation is "far from a crisis affecting most Americans and their health insurance," Altman said.
He warned against unduly alarming the public and driving people to support the wrong policy solutions.
"Already, most Americans wrongly believe that premium increases in the relatively small non-group market affect them," Altman said. "The danger in Congress is that discussion will spread too far beyond the immediate need to stabilize the non-group market, opening up all the old wounds surrounding the ACA and producing stalemate."
Republican and Democratic leaders are working on legislation to try to stabilize the ACA's individual market. The Senate Health, Education, Labor and Pensions Committee plans to convene its first hearing next month.