Premiums for those who buy individual health care plans on the marketplace and who don’t get a subsidy may be surprised this fall, as average premiums are forecast to rise much less than in recent years, according to one report.
ACASignups.net recently released a table of projected premium increases for 2019 based on state filings for Affordable Care Act-compliant health care plans. On average, predictions are that rates for individual market plans will increase 3.69 percent next year.
The website is run by Michigan-based website developer Charles Gaba, who started it as a hobby to figure out how many people were signing up for health insurance through the exchanges.
The 3.69 percent estimate stems from an average rate increase for all the types of health plans a provider offers and what percentage of the market share that provider represents. Gaba does this for all the players in the market—which can shift as insurers join and leave—and then adds up all their rate changes.
To get to the national number of 3.69 precent, he takes an average of all the states’ rate changes, which can vary from as high as a 19.08 percent increase in the state of Washington to as low as a 13.47 percent decrease in New Hampshire, according to Gaba.
But before people start multiplying .04 times their current premium, they should know that there are wide grey areas, large averages, and shifts that make that number unlikely to apply to many people.
While the data is so vague as to hardly apply to individuals, it is useful in understanding a national trend, which according to the data, shows a slowdown in rate hikes. Last year, he estimated a 16 percent increase in rates if the individual mandate, which imposes a penalty on people who are uninsured, and cost-sharing revenue payments, stayed in place. Without those, he estimated rate increases of a little under 30 percent.
The Kaiser Family Foundation (KFF) attempted a similar national estimate based on preliminary data that insurers had submitted to 16 states and the District of Columbia in June. That data predicted an average rate increase of 17 percent for a 40-year-old nonsmoker living in a big city who didn’t receive any government subsidies.
Rate increases for plans varied widely between the different tiers, from a 32 percent rise for bronze plans to a 12 percent rise for the second lowest-cost silver plan to a 7 percent rise for the lowest-cost gold plan.
The rate differences between states also showed the difficulty in estimating a national trend. For example, KFF data gives an estimated 36 percent increase for a 40-year-old in Baltimore and a 24 percent rate decrease for the same 40-year-old in Philadelphia.
Changing Premium Rates
There are several factors that are likely to affect the coming year’s premium rates. One is the increase in short-term limited duration health plans. These plans were created to cover people who faced a temporary loss of insurance, and aren’t required to cover all the things that ACA-compliant plans do, which means they are usually more affordable. Before the changes, these plans could only last for three months, but in August, the Trump administration expanded them to a year with the option to renew twice.
The other change is the expansion of association health plans, which allow small businesses to band together to offer health insurance to their employees, as well as to leverage their collective bargaining power.
The individual mandate is still in effect for 2018, but next year it won’t be. This could mean some people will drop their health care coverage altogether, which some worry could raise rates for those with insurance, if the ones who leave are healthy and were helping offset the cost of those who were not.
And lastly, the effects of Congress cutting funding for the cost-sharing revenue payments starting this year is being felt across the board, although the federal government has offered advice to insurers on how to deal with the loss of payments. The Congressional Budget Office and the Joint Committee on Taxation estimated that silver-level plans increased about 10 percent this year as a result of the lack of funding, and the loss of funding will continue to factor into premium rates in future years.
Looking forward to 2020, premium rates are likely to rise if the ACA’s Health Insurance Tax, which was created to help pay for the state and federal marketplace exchanges, goes back into effect after being suspended for 2019. The tax could raise premiums by 2.2 percent and affect some 142 million consumers, estimates Oliver Wyman Actuarial Consulting.