Obamacare Premiums Will Rise Sharply Without Federal Subsidies


 

If subsidies to cover out-of-pocket costs for low-income Obamacare enrollees aren’t funded, individual market premiums could shoot up 25 to 30 percent on average across the country.

The impact will vary from state to state, but insurers will have to raise premiums to cover the lack of funding if the government doesn’t provide it, John Bertko, an actuary who works with state exchange Covered California, said in a recent briefing with reporters I covered.

“It’s not something that could be just weathered” by insurers, Bertko said. The increase would come on top of premium increases averaging about 25 percent for 2017.

The so-called cost-sharing subsidies are estimated by the Congressional Budget Office to cost $7 billion in 2017 and $10 billion in 2018.

Insurers must provide the increased coverage for exchange enrollees with incomes between 100 percent and 250 percent of the federal poverty level, and medical professionals, health plans and business groups have called on Congress to continue the funding. The Trump administration has reportedly said it will continue to fund the subsidies, but insurers want certainty that the funding will continue for at least two years.

In the first-quarter earnings call for Anthem Inc., President and Chief Executive Officer Joseph Swedish said that “before accounting for any other issues, rates could increase by an additional 20 percent or more if CSR subsidies are not funded,” according to a transcript from Seeking Alpha.

Anthem, a Blue Cross Blue Shield company, is one of the largest carriers left in the exchanges after exits by UnitedHealth Group Inc., Aetna Inc. and Humana Inc. due to exchange plan losses.

A U.S. district court ruled in favor of the House of Representatives, which sued the Obama administration for funding the subsidies without an appropriation from Congress. The court case is on hold while Congress and the Trump administration work on repealing and replacing the Affordable Care Act.

Without the funding, “I would not be at all surprised if there would be some states where no insurers would come back at all rather than try to stay in the market and raise premiums,” Timothy Jost, a consumer representative with the National Association of Insurance Commissioners, said on the telephone briefing.

Read my full story here.

Stay on top of new developments in health law and regulation with a free trial to the Health Law Resource Center.

Learn more about Bloomberg Law and sign up for a free trial.