Average premiums on the Obamacare marketplaces are set to drop by 1.5 percent in 2019, according to the Trump administration, the first time a decline has happened since the market launched in 2014.
The outcomes buck predictions that Obamacare-related actions by the Trump administration and Republicans would lead to spikes in premiums and insurer exits.
Instead, 23 more insurers will be entering the exchange and 29 will be expanding, according a report the Trump administration released Thursday. This past year, 56 percent of counties had only one insurer offering coverage, but that number has dropped to 39 percent for 2019.
Centers for Medicare and Medicaid Services Administrator Seema Verma pointed to the results as evidence that the administration’s actions on healthcare were yielding results. On a phone call with reporters Thursday, she said the outcomes had been “gratifying” for her team, saying they had actively worked to stabilize the market, and pushed back against charges by critics that the Trump administration had worked to “sabotage the law.”
“Despite predictions that our actions would increase rates and destabilize the markets, the opposite has happened,” she said in a statement.
The rates apply to silver plans, which are the mid-level plans on the healthcare.gov exchange. In dollar amounts, they are expected to cost an average of $406 a month, a total that does not include out-of-pocket expenses, such as deductibles.
The exchange was created under Obamacare to allow people who don’t get health insurance through a job or a government program to buy private coverage. Depending on income, certain enrollees will pay $0 for premiums because of the way that subsidies are distributed.
How much a person pays in premiums varies according to which plan they pick, how much they make, whether they smoke, how old they are, and where they live.
The results come despite changes to the healthcare law that pro-Obamacare groups warned would raise premiums. As part of the tax law, Republicans have zeroed out, starting in 2019, the fine for going uninsured, known as the “individual mandate,” and the Trump administration is allowing people to buy plans outside of Obamacare’s rules. The plans are less extensive than those offered under Obamacare, and for this reason are also less expensive. Critics had said that they would winnow out healthier customers and drive up premiums for those left in the Obamacare exchange.
“We have heard a lot of predictions that didn’t turn out to be true … all of the moves that we have made collectively have all come together to lower premiums,” Verma said.
Certain states showed double-digit decreases. Average rates will drop the most in Tennessee, by 26.2 percent. Other states with double-digit rate decreases include Pennsylvania, Arizona, Georgia, Iowa, North Carolina, New Hampshire, and New Jersey.
One way that some of these states moved to lower premiums was to get approval from the Trump administration for a reinsurance program. The program funnels government funding into the market to pay for high-cost medical expenses, keeping premiums at bay for others.
The report from the Trump administration applies to healthcare.gov customers, which is the website 39 states use to shop for plans. It does not yet include the results from states that run their own exchanges.
The rate changes for 2019 suggest that premiums are stabilizing and that insurers are feeling more confident about doing business in the exchanges. The outcomes also indicate that insurers overshot their rate proposals when they applied to sell plans for this year.
When insurers apply to sell in states each year, they must demonstrate whether premiums should rise, fall, or stay the same. When insurers are profiting, they are less likely to have rate increases approved because they are making more than it costs to pay off medical claims.
Experts are careful to note that despite the tempered growth in premiums, the costs are still too high for millions of Americans. Rates increased by roughly 25 percent in 2017 after President Trump ended a program that paid for out-of-pocket expenses for low-income people. Insurers made up the difference through stacking their premiums in a way that caused the federal government to take on more costs, and certain Obamacare enrollees paid less for their plans.
Roughly 7 million people who have the plans don’t qualify for subsidies, while roughly 10 million do. By law, a person only receives help from the government if he or she makes less than roughly $48,000 a year for an individual or $92,000 for a family of four.
In Nebraska, average premiums will cost $687, and in Wyoming, they will cost $709. People who receive subsidies tend to pay the same amount in premiums each year, while the federal government takes on more costs.
Verma acknowledged the high cost in a statement, saying that a change in the healthcare law was needed to make coverage more affordable.
“Even with this reduction, average rates are still too high. If we are going to truly offer affordable, high quality healthcare, ultimately the law needs to change,” she said.
