Obamacare Premiums to Rise 34% for Most-Popular Plans

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By Sara Hansard

Obamacare premiums for the most popular silver plans will rise 34 percent on average in 2018, health policy consulting firm Avalere said Oct. 25 based on its analysis of filings in the 39 states using the federal HealthCare.gov exchange.

That would leave the average unsubsidized cost of silver-tier plans, on which Affordable Care Act subsidies are based, at $743 per month for a 50-year-old, according to Avalere’s analysis. Iowa will see the highest jump in average silver premiums, 69 percent over 2017, while Alaska will see a decrease in premiums for 2018, at 22 percent, it said.

In a separate assessment also released Oct. 25, Avalere said Obamacare enrollment may shrink and many consumers will have fewer plan options.

Avalere cited a number of factors behind the sharply rising premiums, which come on top of premium increases averaging about 25 percent in 2017. President Donald Trump’s decision to stop federal cost-sharing reduction (CSR) payments is contributing to the rise, along with lower-than-anticipated enrollment in the marketplace, limited insurer participation, insufficient action by the government to reimburse plans that cover higher-cost enrollees, and general volatility around the policies governing the exchanges, Avalere said.

HHS Consumer Fact Sheet

The Department of Health and Human Services posted a fact sheet with consumer information about the 2018 open enrollment, which is scheduled for Nov. 1-Dec. 15. The agency said it plans to release a 2018 Health Insurance Exchange Premium Landscape Issue Brief before open enrollment.

Exchange enrollment at the end of 2016 was less than half of what the Congressional Budget Office originally projected when the ACA was passed in 2010, and 12.2 million people selected coverage during the 2017 open enrollment period, down from 12.7 million in 2016, Avalere said.

“Exchanges continue to be small markets comprised largely of lower-income individuals who receive subsidies and higher-income individuals with ongoing health needs,” Caroline Pearson, senior vice president at Avalere, said in a release.

“This year, a shorter open enrollment period, decreased outreach and enrollment activities, and confusion over the current status of the Affordable Care Act could result in fewer people signing up for coverage,” Pearson said.

Insurer Participation in Markets

Nearly half of all counties may have only one participating insurer in their exchange markets, down from a third of counties having only one plan option in 2017, but insurers will largely remain in the market, Avalere said.

The Trump administration’s decision not to continue federal funding for cost-sharing reductions health insurers are required to provide to low-income enrollees under the ACA will result in a 20 percent rate increase just to cover the loss of the subsidies, Avalere said. Even still, ending federal funding for the CSR payments could lead to losses for health plans ranging from $1.2 million in North Dakota to $200 million in Florida through the end of 2017, it said.

Eighty-four percent of exchange enrollees received federal subsidies in 2017. Subsidized enrollees can avoid premium increases by switching plans, Avalere said.

But unlike previous years, automatic enrollment for people who don’t take any action is scheduled to take place after the close of the annual enrollment period, potentially prohibiting consumers from switching to a lower-cost option if they don’t select a different plan during open enrollment, it said.

States’ Accounting of CSR Payment

Many states allowed carriers to apply premium increases related to the CSRs only to silver-tier plans. The CSRs are only available for low-income people who choose silver-tier plans. In those states, unsubsidized consumers may be able to find comparable, lower-cost options off the exchanges or in bronze and gold exchange plans, it said.

But in some states, consumers who don’t receive premium tax credit subsidies will face large premium increases across all plan options, Avalere said.

Elizabeth Carpenter, senior vice president at Avalere, told Bloomberg Law Oct. 25 that at least the following states have nonpayment of CSRs reflected across all plan types: Arizona, Colorado, Nebraska, Oklahoma, Arkansas, Louisiana, Indiana, Ohio, Michigan, South Carolina, and Delaware.

Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) are working on legislation intended to stabilize the health insurance markets. But any legislative effort is unlikely to affect 2018 rates at this late date, Avalere said. The administration and state insurance departments would need to work together to find a way for consumers and the federal government to claim refunds for higher premiums caused by the lack of CSR funding, it said.

Trump’s Oct. 12 executive order directing agencies to consider new health insurance market regulations may shape the individual and small group markets starting in 2019, Avalere said.

Policies under the order that would make it easier to offer association health plans and short-term plans that don’t comply with the ACA could pull healthy enrollees away from the individual exchanges.

But allowing employees to use health reimbursement accounts to buy individual market insurance may drive enrollment from the small group market to the individual market, potentially improving the individual market risk pool, it said.

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

Avalere Health's report, Silver Exchange Premiums Rise 34% on Average in 2018, is at http://avalere.com/expertise/managed-care/insights/silver-exchange-premiums-rise-34-on-average-in-2018.Avalere Health's open enrollment preview is at http://src.bna.com/tGf.The HHS open enrollment fact sheet is at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-25.html.The Alexander-Murray draft market stabilization legislation is at http://src.bna.com/tGD.

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