Health insurance premiums for the first Obamacare open enrollment under President Trump will be 37 percent higher than last year for mid-level plans sold on healthcare.gov, according to a new report by the Department of Health and Human Services.
Healthcare.gov is the website created by the federal government that 38 states use to sell Obamacare coverage during the open enrollment period, which runs this year from Nov. 1 to Dec. 15. People who buy these plans do not receive health insurance through work or through a government program, and roughly 6 percent of people in the U.S. get coverage this way.
The latest report, prepared by the Office of the Assistant Secretary for Planning and Evaluation, found that a 27-year-old who buys a mid-level plan, known as a silver plan, and does not receive a subsidy from the federal government will pay an average of $4,932 in premiums for 2018. In 2017, someone with that profile paid $3,600 in premiums for the year, and in 2016, they paid $2,904.
During Obamacare’s first year, in 2014, someone with that profile would have paid $2,616.
Obamacare customers will also have fewer health insurers to buy coverage from, which will also limit the doctors and hospitals that they can see under these plans. The report found that the percentage of customers who have more than two options is shrinking.
Specifically, it said that 55 percent of Obamacare customers will have just one or two health insurance options, up from 43 percent last year. Twenty-nine percent of total enrollees will have one health insurance company to buy coverage from, an increase from 2 percent of customers in 2016. Eight states will have one insurer offering coverage across the whole state. In total, 132 health insurers are selling Obamacare plans across the country, down from 237 insurers two years ago.
“This data demonstrates just how rapidly Obamacare’s exchanges are deteriorating with skyrocketing premiums year after year, more than half of Americans with no more than two insurers to choose from, and the taxpayer burden exploding,” Caitlin Oakley, press secretary for the Department of Health and Human Services, said in an email. “There is an urgent and serious need to repeal this failed law and replace it with patient-centered solutions.”
Most of the customers who buy coverage through the site will receive federal subsidies that make coverage less expensive, but millions of middle-income people are cut off from these benefits because of how the law was written. Subsidized customers number 8.7 million, according to the Kaiser Family Foundation.
Last year, the cost of premiums increased by 24 percent for plans sold on healthcare.gov. Obamacare’s defenders said this was because health insurance companies had priced their plans too low during the first two years. Quarterly earnings reports also show insurers also have continued to lose millions of dollars selling these plans as fewer healthier customers enrolled than they had expected.
“Ever-growing subsidies are chasing skyrocketing premiums, pricing out middle-income Americans and turning Obamacare’s exchange into a de facto high-risk pool,” wrote Nathan Bult, spokesman for the Department of Health and Human Services, in an email outlining highlights from the report.
Prices for Obamacare plans are rising in part because insurers prepared for the expectation that Trump would end payments to them known as cost-sharing reduction subsidies. Trump ended the payments earlier in October, noting they had been ruled illegal by a federal judge under former President Barack Obama because they had not been appropriated by Congress.
The funds help insurers offer lower out-of-pocket costs to low-income customers, and under the law insurers must still offer them even if the government does not reimburse for them. To do so, many insurers raised the price of premiums.
Most people who enroll through healthcare.gov will not personally feel the impact of rising premiums because Obamacare caps costs for them by kicking in additional subsidies. Some of these enrollees will be able to buy a higher-tiered plan, like a gold plan, at a lower price. These plans have lower deductibles.
But unsubsidized customers who buy Obamacare plans, whether on healthcare.gov or directly through a broker, will feel the brunt of the increases. These customers, estimated at roughly 6.7 million people according to Kaiser Family Foundation data, make more than the Obamacare cut-off of $48,240 a year for an individual or $94,400 for a family of four.
Premium subsidies are increasing by 45 percent to make up for the difference in cost to subsidized customers. The federal government is kicking in an average of $555 per subsidized customer every month. Last year it paid an average of $382 per month.
A Congressional Budget Office report found that 20 percent of the increase in the price of premiums can be attributable to ending cost-sharing subsidies.
