Uncertainty in the individual market may lead to huge premium hikes over the next three years, a new Covered California report predicted.
Covered California, which connects the state's consumers with Affordable Care Act plans, said the Trump administration and recent congressional decisions exacerbated market instability. The group pointed to Congress ending the individual mandate penalty as part of the tax legislation, President Donald Trump's promotion of association health plans (AHPs) and short-term catastrophic plans and the administration's cuts to marketing and outreach for (ACA) exchange plans.
The report said those actions could cause healthy ACA plan members to flee the marketplace by either dropping coverage altogether or enrolling in less expensive AHPs or catastrophic plans.
Covered California predicted premium increases between 12% and 32% for every state in 2019 and between 36% and 94% over a three-year period.
The group reviewed the 2016 risk mix of each state and the marketplace enrollment trends for 2017 and 2018. Researchers also looked to see the number of insurer options for consumers and premiums for each state.
The report estimated the biggest premium increase driver will be eliminating the individual mandate. Killing the mandate will cause a 7% to 15% premium increase in 2019 and 2.5% to 10% in 2020 and 2021 each year, the report predicted.
The Trump administration’s decision to cut open enrollment in half and reduce the marketing budget for ACA plans could either decrease premiums by 2% or increase them up to 9% in 2019 before increasing premiums as much as 2% each over 2020 and 2021.
The third piece, expanding AHPs and short-term plans, could increase premiums by 0.3% to 1.3% in 2019 and then 0.5% to 2% in each of the two following years.
The report predicted 17 states could see premium increases of 90% or more and another 19 could see premium hikes of 50%. Covered California said the increases are more than double the rate of medical inflation.
In response to Covered California’s report, Sen. Patty Murray, D-WA, who has worked with Republican Sen. Lamar Alexander, R-TN, on bipartisan legislation to reinstate cost-sharing reduction (CSR) payments for insurance companies in the exchanges, criticized Republicans for “healthcare sabotage.”
"We have a real opportunity to help lower families’ health costs in our bipartisan healthcare negotiations and I’m very hopeful Republicans will agree families shouldn't pay the price for their politically-motivated healthcare sabotage.”
Despite Covered California’s grim outlook, the report said federal and state leaders could devise policies and pass legislation to lower premiums and spark more payer competition in the ACA marketplace, including:
- Create a reinsurance or state-based high-risk pool.
- Bring back CSR payments for insurance companies in the ACA exchanges that the president ended in October.
- Implement a health insurance tax moratorium for 2019.
- Enhance marketing and outreach for ACA plans.
- Increase financial assistance for consumers, such as raising the Advanced Premium Tax Credit available to consumers.
- Auto-enroll in ACA plans eligible people who lose employer-based coverage, earn too much for Medicaid or age out of parent health plans.
- Implement state-based individual mandates.
A few states have said they will push back against the zeroing out of the individual mandate penalty in the tax legislation. However, even the bluest of blue states haven’t implemented their own mandates since Congress took a whack at the coverage requirement.
The Congressional Budget Office has predicted that premiums will increase by 10% annually in most years without the individual mandate and 13 million fewer people will have health insurance over the next decade.