More Insurers, Low Rate Hikes: Obamacare Looks Healthy for 2019
A year ago, there were dire forecasts for the Affordable Care Act. However, the health insurance system seems to have stabilized.
To paraphrase Mark Twain, the reports of the death of the Affordable Care Act appear to have been exaggerated.
With the 2019 enrollment period for the health system known as Obamacare just six weeks away, a new analysis predicts that insurance premium increases are expected to be relatively low.
In addition, the analysis states that more insurers are expected to return to the Affordable Care Act (ACA) marketplace this coming year.
The analysis was done by Avalere Health and the Associated Press.
The analysts foresee average insurance premium increases of 3.6 percent next year for health plans purchased in ACA marketplaces in 47 states and Washington, D.C.
This follows increases of about 30 percent each of the past two years.
The analysts also report that some insurers who left the marketplaces are ready to get back in. Others who stayed in are looking to expand.
In fact, 19 states are reported to have new or expanding insurers. There also are no “bare” counties in the United States without any insurers.
This will give consumers more choices.
Last year, Republican leaders in Congress tried and failed to repeal the ACA.
Last summer, President Donald Trump said, “Obamacare is finished.”
That doesn’t appear to be the case. At least not yet.
While it’s too early to predict any long-term trends, Avalere officials say the large premium hikes of the past two years seem to have stabilized the ACA markets and made them potentially profitable.
“It appears the health plans have caught up,” Chris Sloan, a senior manager at Avalere, told Healthline. “The markets are actually reflecting the risks.”
“I think the market has stabilized,” adds Kurt Mosley, vice president of strategic alliances at Merritt Hawkins. “I think there has been a market correction the past two years.”
Obamacare by the numbers
The 2019 open enrollment period begins on Nov. 1 and lasts until Dec. 15.
Plans sold during that period will begin coverage on Jan. 1.
If you don’t sign up before Dec. 15, you’ll need to qualify for a special exemption to purchase coverage.
During last year’s enrollment period, 11.8 million consumers purchased or were automatically re-enrolled in ACA plans. That was slightly below the previous year.
About 8.8 million people signed up in the 39 states that use the federal ACA website. Another 3 million signed up in states that have their own websites.
About 27 percent of the enrollees were new customers.
About 63 percent purchased the mid-priced silver plans.
The average monthly premium for 2018 ACA plans before tax credits and subsidies was $621. In 2017, it was $476.
Those costs aren’t expected to rise much next year.
That’s despite what some critics say was a campaign by the Trump administration to sabotage Obamacare.
Among those efforts was a provision in a tax cut bill signed in December 2017 that eliminated the individual mandate. That rule required consumers to have health insurance or pay a fine on their income tax return.
In addition, the Trump administration eliminated or reduced the subsidies paid to insurance companies for taking on consumers with chronic illnesses.
The administration also reduced spending for ACA advertising and promotion as well as the facilitators who help consumers navigate the ACA system.
Earlier this year, the White House also adopted new rules that allow states to let insurance companies sell short-term insurance plans for a longer period of time.
Those plans, which are cheaper but don’t offer all the coverage required under ACA rules, can last for three years now instead of three months.
Some patient groups last week filed a lawsuit against these short-term plans.
The administration also approved “hardship exemptions” that let consumers opt out of coverage if, for example, their county only has one insurance provider.
Consumers can also opt out if they oppose abortion and all the insurance providers in their area cover that procedure.
In addition, there is a pending court case in Texas in which 20 states are attempting to have the ACA declared unconstitutional.
The Trump administration declined to defend Obamacare in court, so California and 16 other states signed on as defendants in the litigation.
However, all these efforts, at least for the moment, haven’t destroyed Obamacare.
In fact, it was announced last week that the number of Americans without insurance remained at 8.8 percent this year.
That still means people are without health insurance, but the numbers are much the same as those from 2017.
“I think the system has survived most of the shocks from the new administration,” said Sloan.
Why Obamacare has survived
Experts say there are number of reasons the ACA marketplace is in a relatively healthy condition.
The first, they say, is the sharp premium increases of the past two years. That has allowed the ACA market to be potentially profitable.
“The pool (of customers) is getting to be more of a real pool,” Mosley told Healthline. “This is an opportunity to make money. There is more of a level playing field now.”
Kelley Turek, the executive director of employer and commercial policy at America’s Health Insurance Plans (AHIP), agrees.
“It’s a new program that is settling down,” she told Healthline. “Insurers are better understanding the market.”
Mosley also points out that the pool of customers isn’t as unhealthy as it was when Obamacare debuted.
He said many people with serious or chronic illnesses have never had insurance.
Now, with coverage, they are getting preventative care and are less costly to insure.
“A lot of these people were extremely sick,” he noted.
There is also a consensus that the White House and Republican congressional leaders have given up on plans to repeal Obamacare.
That adds stability to the market.
“It seems like things have settled down,” said Turek.
Turek also points out that some states have picked up the slack for the lack of federal subsidies to insurers.
Finally, the requirement that insurers accept customers with pre-existing conditions is still around.
That’s an important incentive for consumers to enroll.
There are a numbers of problems that remain and need to be solved to keep the ACA markets healthy.
The first is affordability.
Despite the predicted lower premiums next year, many consumers still need subsidies to be able to afford insurance plans.
“There’s a very real question of what is affordable if you’re not subsidized,” said Sloan. “It’s still a major issue. It’s not what the ACA was intended to do.”
Mosley points out that many consumers have to pick plans with deductibles as high as $6,000 a year to be able to afford coverage.
“Is that really insurance?” he asks.
There’s also the question of how much the elimination of the individual mandate will affect enrollment.
So far, the fines imposed haven’t been large enough to encourage younger, healthier people to sign up.
Without the penalties in place, it remains to be seen if even fewer of these low-cost customers will enroll.
“The mandate is not as effective as originally planned,” notes Sloan.
It’s also unclear what long-term impact some of the changes made by the Trump administration will have.
“The jury is still out on how healthy the ACA is,” said Mosley.