Obamacare 2018 Premiums Could Rise 30% Without Subsidies

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By Sara Hansard

Health insurance premiums could rise 25 to 30 percent on average across the country if insurers do not get paid subsidies for low-income Obamacare enrollees.

That was the assessment of John Bertko, an actuarial consultant for Covered California, the nation’s largest state-run Affordable Care Act exchange. Bertko spoke April 24 to reporters in a telephone conference call on the impact of not funding the ACA cost-sharing subsidies, estimated by the Congressional Budget Office to be worth $7 billion in 2017 and $10 billion in 2018.

Bertko’s assessment came on top of calls from health insurers, actuaries, health-care providers, consumer groups and the U.S. Chamber of Commerce for Congress and the Trump administration to fund the subsidies. The subsidies are in dispute as a result of a lawsuit originally filed by the House of Representatives against the Obama administration for making the payments without an appropriation from Congress. In addition to sharp premium increases if the subsidies aren’t paid to insurers, many carriers would likely withdraw from the exchanges in 2018, many industry followers predict.

Average Increase About 28 Percent

The average increase in premiums for individual market plans is expected to be about 28 percent nationwide, Bertko said on the call sponsored by the Commonwealth Fund, a New York-based research group that is supportive of the ACA.

That includes increased medical utilization costs expected to account for 7 percentage points for 2018, as well as a 2 percentage point increase if the ACA health insurance fee is reinstated, he said. Congress put a moratorium on the fee for 2017.

The lawsuit over the cost-sharing payments, originally U.S. House of Representatives v. Burwell, 2016 BL 151586, 185 F. Supp. 3d 165 (D.D.C. 2016), has been delayed after a U.S. district court ruled that the Obama administration had made the payments illegally without an explicit congressional appropriation.

The cost-sharing subsidies are available to people with incomes between 100 and 250 percent of the federal poverty level, and they are paid to insurers to increase the actuarial value of claims the plans must cover, as well as reduce out-of-pocket payments for copays, deductibles and coinsurance.

More than half of ACA exchange enrollees, about 7 million people, receive the cost-sharing reduction subsidies.

The Trump administration has continued the payments through April, and Congress could decide to include an appropriation for them as part of its budget continuing resolution that may be acted on the week of April 24, Timothy Jost, a consumer representative to the National Association of Insurance Commissioners, said during the telephone conference. The next payment is due May 19, he said.

‘Serious Challenges’ Face 2018 Market

“Serious challenges to the stability and sustainability of the market exist for 2018, especially as some insurers have announced or are considering withdrawing from the market,” the American Academy of Actuaries (AAA) said in an issue brief released April 24.

Continued funding of the cost-sharing reimbursements, enforcing the penalty for not having qualified coverage and increasing funding to shore up the individual health insurance market were listed by the AAA as the top steps needed to make the individual market stable for 2018.

“The priority is the cost-sharing reduction funding,” Cori Uccello, the senior health fellow at the AAA, told Bloomberg BNA April 24. “If that’s not provided the premiums would have to be higher and insurers might be more leery of continuing on in the market,” she said.

More than 20 million people either paid the individual mandate penalty or were exempted from it in 2014, according to the Internal Revenue Service, and there is a fear that there will be less enforcement of the penalty under the Trump administration, Uccello said.

In addition, additional funding for subsidies or a reinsurance program to compensate insurers for losses from high-claim enrollees is needed, Uccello said.

The ACA’s reinsurance program to cover high claims ended at the end of 2016, but enrollees in the ACA exchanges are sicker than expected and insurers have said more federal funding is needed to cover them.

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

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

The CBO's "Federal Subsidies Under the Affordable Care Act for Health Insurance Coverage Related to the Expansion of Medicaid and Nongroup Health Insurance: January 2017" is at https://www.cbo.gov/sites/default/files/recurringdata/51298-2017-01-healthinsurance.pdf.

The American Academy of Actuaries issue brief is at http://www.actuary.org/content/steps-toward-more-sustainable-individual-health-insurance-market.

A January 2016 letter from IRS Commissioner John Koskinen to Congress, which included data on the individual shared responsibility provision for 2014, is at https://www.irs.gov/pub/newsroom/irs_letter_aca_stats_010816.pdf.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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