Higher Obamacare premiums will cause 2 million more people than expected to become uninsured between this year and next, according to a report published Thursday by the Congressional Budget Office and the Joint Committee on Taxation.
The premium increases will affect people who don't have medical coverage through a job or the government and do not receive subsidies under Obamacare to pay for coverage.
Despite the loss in coverage, CBO called the market "stable" for people who buy coverage on the exchanges or directly from a broker or health insurance company. It noted that most people who buy coverage on the Obamacare exchanges, individuals who have incomes of $48,240 or less, receive subsidies that increase when the cost of premiums increase, which shields them from higher costs.
"Those subsidies — combined with the effects of the individual mandate, which requires most people to have insurance or pay a penalty, and other factors — are anticipated to result in demand for insurance by enough people, including people with low healthcare expenditures, that the number of insurers in the marketplaces would stabilize and insurers would be willing to sell nongroup policies in almost all areas of the country throughout the next decade," CBO concluded.
But as many as 9 million Americans do not qualify for subsidies, and some already chose to go without insurance when mid-level premiums were set to increase by 22 percent for 2017, while another portion of them have kept plans that were in place before Obamacare, which are less expensive but offer fewer benefits and protections.
Roughly 1 million of those who will become uninsured compared to CBO's initial projections had bought their coverage on the Obamacare exchanges, and 1 million others had purchased it directly through a broker or health insurance company.
News of planned premium increases came after some insurers fled the exchanges for 2018, while others plan double-digit rate increases as high as 50 percent for mid-level plans. Insurers have attributed their exits to massive losses they incurred as too few young, healthy people bought their plans, resulting in an unbalanced risk pool. They also have cited uncertainty from the Trump administration and from Republicans in Congress over the future of the law, related to how much government funding they will receive and how to price their policies.
Because of the uncertainty over Obamacare funding, CBO and JCT project that mid-level plans will cost about 15 percent more than in 2017. After that, the agencies project 5 percent increases per year from 2017 to 2027, assuming the funds, known as cost-sharing reduction subsidies, are appropriated. A bipartisan group of senators is working on a short-term stability bill that is considering the inclusion of those funds, but Democrats and Republicans disagree about how long to do so.
CBO's projections on Obamacare have changed over the years. Its projections on how many people would sign up for Obamacare plans under the exchanges fell short by about half, and it also fell short in determining how many people would sign up for Medicaid, even though the program was not expanded in every state as the law originally intended. If more states were to expand the program, the number of uninsured would be lower, CBO has said.
The lower enrollment will result in the government spending $137 billion less from 2017 to 2026, largely because of the reduction in subsidies that the federal government provides to help people pay for Obamacare coverage and for the Basic Health Program, a coverage option some states provide under Obamacare. The net decrease in spending is $88 billion.
In all, the federal subsidies, taxes and penalties associated with health insurance coverage for people under age 65 will result in a net subsidy from the federal government of $705 billion, which would be equal to 3.7 percent of gross domestic product. That amount is projected to rise at an average annual rate of 5 percent between 2017 and 2027, reaching $1.2 trillion, or 4.1 percent of gross domestic product. For the entire 2018–2027 period, the projected net subsidy is $9.2 trillion.
Two types of costs account for most of that amount:
• The subsidies include those given to employers to offer private plans to their workers, a provision that covers two-thirds of Americans, as well as the cost of Medicaid to people younger than 65 and the subsidies given to low- and middle-income Obamacare customers.
• The report does not include Medicaid costs for people older than 65, much of which goes toward nursing home care, or the costs of Medicaid.