Recent years of premium hikes on Obamacare’s insurance marketplaces are likely due to fewer insurers competing for customers, a new study claims.
The study published Monday in the journal Health Affairs comes as Democrats and Republicans are set to battle over who is to blame for high prices for the marketplaces for 2019.
The study looked at 2017 and 2018 price hikes on the marketplaces, which serve the individual insurance market for people who don’t have insurance through a job or the government.
“Some experts have speculated that these increases are due to greater enrollment among sicker patients, the expiration of market stabilization policies, or the federal government’s discontinuation of funding for cost-sharing subsidies,” the study said. “However, these factors do not explain why some rating areas have experienced rapid premium growth, while others have experienced more modest increases.”
The study helps Republican claims that Obamacare is collapsing and that insurers are fleeing the exchanges, a frequent political point from the past few years. However, Democrats believe they have the upper hand for proposed rates for the 2019 coverage year because of moves by the Trump administration and Congress that they claim are acts of “sabotage” of Obamacare.
The study looked at rates for states that use the federally run healthcare.gov, which residents in 38 states use to sign up for Obamacare plans.
In 2018, marketplace premiums were 50 percent higher on average in rating areas that had only one insurer, compared to those with more than two insurers, the study said.
“This was driven by large premium increases for the monopolist insurers’ lowest-cost plans,” the study said.
Insurer participation has steadily declined on Obamacare’s marketplaces due to mounting financial losses.
In 2014, when the marketplaces first went online, there were an average of 5 insurers participating in a state’s marketplace, according to a study from the research firm Kaiser Family Foundation.
However, by 2017 financial losses due in part to a sicker-than-expected population led to a number of insurers fleeing the exchanges. The average number of insurers per state dipped to 4.3 and declined again in 2018 to 3.5, Kaiser said.
While a few insurers have announced they are expanding in the marketplaces in 2019, it remains unclear how many will offer coverage.
Meanwhile, proposed premium hikes for Obamacare marketplaces for 2019 have become political fodder for Democrats, who blame Republicans for the hikes. Democrats claim that the repeal of the financial penalty for the individual mandate starting in 2019 and the addition of cheaper plans with lower benefits will destabilize the marketplaces.
Some insurers who are proposing price hikes for 2019 have cited the expansion of plans and the loss of the individual mandate penalty for not having insurance as reasons for the hikes. They worry that younger and healthier people will flee the marketplaces for the cheaper plans or forgo insurance altogether now that they would not face the penalty for doing so.
Other insurers in some states have proposed lower prices due in part to a moratorium on a health insurer tax.
