Benchmark Obamacare Prices Rising 37 Percent, HHS Reports

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By Sara Hansard

Premiums for the benchmark Obamacare health plans used to determine tax credit subsidy payments are rising 37 percent in 2018, the HHS said.

The Oct. 30 Department of Health and Human Services report “demonstrates that Obamacare premiums continue to climb and choices continue to plummet,” the HHS said in a release. The report comes shortly before the start of the Nov. 1-Dec. 15 open enrollment period for 2018.

The pessimistic findings from the agency that implements Obamacare came on the same day a group that supports the insurance-coverage program predicted a sharp drop—about 9 percent—in enrollments for the next year. Meanwhile, S&P Global Ratings forecast a potential drop of 7 percent to 13 percent in enrollments.

The HHS said the benchmark second-lowest-cost silver plans in the federal HealthCare.gov exchange used in 39 states are rising sharply in part because of the discontinuation of federal payments to cover cost-sharing reductions (CSRs). CSRs are a different type of subsidy that insurers are required to provide to low-income people who buy silver-tier plans.

But tax credit subsidies will rise as benchmark plan prices rise, meaning many people who receive premium subsidies will be able to afford to buy higher-value plans, or they may not have to pay anything for some plans. Enrollees eligible for premium subsidies may pay a lower portion of their premiums compared with prior years, especially if they select plans from metal levels other than silver, the HHS said.

The HHS report follows recent reports from consultants and foundations examining sharp increases in Obamacare premiums for 2018.

Nearly $5,000 Premiums for 27-Year-Old

Before subsidies are factored in, average annual premiums for the benchmark plan for a 27-year-old will be $4,932 in 2018, the HHS said. The average premium increase for the lowest cost silver plan, which covers an average of 70 percent of medical claims, will be 17 percent, on top of comparable premium increases of 27 percent in 2017, it said.

The average advance premium tax credit will increase 45 percent in 2018, the HHS said, rising from $382 per month in 2017 to $555 a month in 2018, the HHS said. “Ever growing subsidies are chasing skyrocketing premiums, pricing out middle-income Americans and turning Obamacare’s exchange into a de facto high-risk pool,” it said.

The HHS report also found dwindling insurer choices for the next year. Twenty-nine percent of HealthCare.gov enrollees will have the option of only one health insurance issuer offering, up from 20 percent in 2017 and 2 percent in 2016, the HHS said. The number of state issuers for 2018 will be 132, down from 167 in 2017, and eight states will have only one issuer offering plans on the federal exchange, it said.

Enrollment Likely to Fall in 2018

Enrollment is likely to be lower than the 12.2 million people who signed up during 2017 open enrollment period.

The Center for American Progress, which favors the Affordable Care Act, released its own report on Oct. 30 predicting that enrollment will drop by at least 1.1 million because of actions taken by the Trump administration, such as a 90 percent cut in advertising funding (to $10 million), ending the CSR reimbursements to health insurers—which forced insurers to raise premiums to cover their cost, as well as confusion among consumers.

Marketplace enrollment would be holding steady in 2018 “had it not been for sabotage of the Affordable Care Act by the Trump administration,” Emily Gee, a health economist with the center and a former economist with the HHS during the Obama administration, said on a press call Oct. 30.

The HHS report focuses on premium increases rather than emphasizing the fact that 80 percent of HealthCare.gov consumers are eligible for the premium subsidies that leaves their monthly charges at $75 or less in 2018, Gee said.

Individual Market Was Stabilizing

The individual market has been stabilizing, Richard Frank, a professor of health economics at Harvard University and a former HHS official in the Obama administration, said on the Center for American Progress press call.

Data from the National Association of Insurance Commissioners show insurers’ margins have more than doubled in the past two years, and “absent administration efforts premium increases would have sat in the high-single digits” in 2018, he said.

“Claims for services for those insurers have been quite flat, a fact inconsistent with the death-spiral claims being made by the administration,” Frank said.

Also Oct. 30, S&P Global Ratings released a report finding that uncertainty surrounding the ACA individual marketplace will result in lower 2018 enrollment.

Between 10.6 million and 11.4 million will enroll in 2018, a drop of 7 percent to 13 percent from 2017, S&P Global Ratings said. After premium payments are taken into account, between 8.3 million and 9 million “effectuated” enrollees will have marketplace coverage in 2018, it said. Effectuated refers to enrollees who have actually paid for coverage.

Uncertainty Brewing

“Insurer exits, higher-than-expected premium rate hikes, a series of repeal-and-replace votes, the cancellation of future federal cost-sharing reduction (CSR) subsidies, an executive order on health care, and a recent discussion about a short-term bipartisan fix have all contributed to the uncertainty that has been brewing lately,” S&P Global Ratings said.

Most individuals who maintained ACA insurance throughout 2017 will re-enroll for the fifth open enrollment, but fewer new enrollees will enter the marketplace than during previous open enrollments, S&P Global Ratings said. Effectuated enrollment for 2017 is estimated at 9 million, it said.

“We expect a continuation of the trend of enrollment jumping at the beginning of the year and then gradually declining as the year proceeds,” S&P Global Ratings said. “We don’t expect it to grow meaningfully above 9 million without active outreach to the eligible individuals who remain uninsured.

“Insurance remains a product that is sold rather than bought, and this is especially the case when trying to gain wider acceptance for health insurance among individuals who consider themselves young and invincible.”

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

The HHS's report, Health Plan Choice and Premiums in the 2018 Federal Health Insurance Exchange, is at https://aspe.hhs.gov/pdf-report/health-plan-choice-and-premiums-2018-federal-health-insurance-exchange.

The Center for American Progress report, Projected 2018 Marketplace Enrollment in the Absence of ACA Sabotage, is at https://www.americanprogress.org/issues/healthcare/news/2017/10/30/441611/projected-2018-marketplace-enrollment-in-the-absence-of-aca-sabotage/.

The S&P Global Ratings report about 2018 ACA enrollment is at http://src.bna.com/tNM.

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