Obamacare is “increasingly failing” to cover people who don’t get the government to pay for premiums, according to the Trump administration.
Twenty percent of people who don’t receive subsidies dropped their Obamacare coverage in 2017 due to increasing costs, according to data from the Centers for Medicare and Medicaid Services, highlighting a trend that has been occurring since 2015. Between 2015 and 2016, unsubsidized enrollment fell in 23 states, with 10 states seeing double-digit declines.
“As the Trump administration took office, there were warning signs that we were dealing with a crisis in the individual health insurance market and Obamacare was failing its consumers,” Seema Verma, CMS administrator, said in a statement. “These reports show that the high price plans on the individual market are unaffordable and forcing unsubsidized middle class consumers to drop coverage.”
The Trump administration drew attention to these Obamacare customers, who are cut off from the benefits of lower premiums. Like Obamacare customers who get subsidies, the unsubsidized tend to be self-employed or do not receive coverage through work. The difference is that they pay for increasingly expensive Obamacare coverage every year because they make more than the law’s income cutoff of roughly $48,000 a year.
About 10 million people receive subsidies to help pay for coverage while an estimated 7 million do not. The majority of the unsubsidized buy coverage outside of the exchanges and directly from insurers.
This group, CMS said, is being “priced out” and is dropping Obamacare coverage as premiums have risen. Premiums increased an average of 21 percent in 2017, without any changes from the Trump administration. At the time, insurers were fleeing the exchanges saying that they had faced massive losses, and that customers on the exchange had higher costs and lower enrollment than expected.
For 2018, premiums increased by an average of roughly 27 percent more, after President Trump ended payments to insurers known as cost-sharing reduction subsidies. This move is widely accepted by health policy experts and insurers to have led to an even higher increase in premiums, as was the uncertainty that health insurers faced over whether Republicans would repeal Obamacare.
The pro-Obamacare organization Protect Our Care issued a statement in response to the CMS study saying that the document “confirms GOP sabotage” and that the premium increases were “avoidable.”
But premiums didn’t rise for everyone in 2018. For some, the actions by the Trump administration ended up making the cost of health insurance cheaper by increasing subsidies.
Insurers have been able to offer less expensive coverage to certain customers because of the way they structure their plans. Because federal subsidies are based on a formula tied to price of a silver plan, by increasing the sticker price on silver plans, insurers are effectively increasing the federal subsidies. The move, known as “silver loading,” allows certain customers to pay little to nothing for coverage of cheaper “bronze” plans — or even makes “gold” plans an affordable option in some cases.
CMS report does not mention this strategy, but data show that the amount the government kicked in from 2017 to 2018 rose by 39 percent, from $373 to $520 per person. In all, the government is expected to spend $17 billion on subsidies in 2018.
Heading into 2019, the Trump administration will be offering coverage targeting unsubsidized customers in the form of association health plans, which allow individuals or small businesses to band together for the purpose of buying coverage. It also is set to allow customers to buy short-term plans, which the Obama administration had limited to three months late in former President Barack Obama’s term and the Trump administration wants to re-expand.
Democrats and other critics of the provisions have called them “junk insurance” because they are not required to cover as much as Obamacare does. Both offerings are expected to be less expensive than Obamacare plans, but they also will not necessarily cover a range of medical services and do not guarantee coverage for pre-existing illnesses.
The document from CMS doesn’t evaluate premiums for 2019, but early estimates show they will rise by an average price of 15 percent. This is in part due to the Trump administration’s offerings but also because the fine for going uninsured will be gone. As a result of both actions, a sicker population is expected to stay in Obamacare, which will in turn raise prices.
CMS acknowledged that the exchanges “remain relatively stable,” and noted that subsidized enrollment fell by only 3 percent, or 223,000 people, in 2017.
