When President Trump won the November election, it was widely believed that the Affordable Care Act (ACA) was soon to be history. The ACA, more commonly known as Obamacare, has been relatively unpopular since it was signed into law back in March 2010 by Barack Obama. Trump had also pledged to repeal Obamacare as one of his core promises when entering the Oval Office.
However, the ACA hit its primary goal of dramatically reducing the uninsured rate in this country from 16% before its implementation to around 9%. This success, coupled with public backlash about the possibility of Obamacare being repealed and millions of Americans potentially losing access to health coverage, made pulling the plug on the ACA impossible for Republicans in 2017.
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Here's how much your Obamacare premium is likely to increase in 2018
As we barrel toward the end of the calendar year, one thing seems certain: Obamacare is here to stay, at least for a few more months. This means the 2018 enrollment period will kick off as usual on Nov. 1, 2017, and run through Dec. 15, 2017, giving Americans an opportunity to enroll for health insurance in the coming year.
But consumers could nonetheless be in for a rude awakening in 2018. Probably the first thing you'll notice is sticker shock, because consumers are going to be paying a lot more for their monthly premiums, on average, than they did in 2017.
According to a recently released report from the Congressional Budget Office, the national average premium is expected to rise by (drum roll) 15% in 2018! If we utilize data from HealthPocket, which found that the average unsubsidized bronze plan (the lowest-priced tier) was $311 a month in 2017, we could be looking at the typical unsubsidized consumer paying $47 a month extra for healthcare in 2018. All told, it wouldn't be a surprise if the average bronze premium topped $4,000 next year for an unsubsidized individual, which is bordering on being unaffordable for middle-class Americans.
Of course, what you'll pay for premiums will really depend on where you live. For instance, Alaska, which regularly has among the highest premiums, introduced a reinsurance program that should push premiums down by a double-digit percentage in 2018. Meanwhile, residents in Maryland could be facing some of the steepest increases in the country, with CareFirst of Maryland and CareFirst Blue Choice requesting respective increases of 58.8% and 50.4%, and one Cigna plan within the state asking for a nearly 151% premium hike.
Image source: President Donald J. Trump's official Facebook page. Photo by Shealah Craighead.
The end of cost-sharing reductions is set to do a number on premiums
You might be wondering why Obamacare premiums are shooting into the stratosphere. Though there are more than a half-dozen reasons, two really stand out as being responsible for the bulk of the premium increases in 2018.
The first issue is uncertainty created by President Trump's decision to end cost-sharing reductions (CSR). While it looks as if the Advanced Premium Tax Credit, the subsidy that lowers premium costs for those earning up to 400% of the federal poverty level, is here to stay as long as the ACA remains the health law of the land, CSRs will be cut off. CSRs reduced the costs of copays, coinsurance, and deductibles associated with receiving medical care, and they were available to those who earned up to 250% of the federal poverty level. It's worth noting that CSRs were also only available to people who buy a silver-level plan.
Back in 2014, Republicans sued then head of the Department of Health and Human Services, Sylvia Burwell, alleging that Congress had not properly appropriated funding for CSRs. In 2016, a federal judge agreed and sided with Republicans, but immediately stayed the order on the expectation of an appeal from the Obama administration. That appeal has since carried over to the Trump administration. President Trump has now chosen to drop the appeal and cut $9 billion to $11 billion in annual CSR funding, which could be devastating to about 7 million eligible Americans. It would also discourage insurers from targeting government-sponsored consumers.
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Young adult enrollment is just as big of a problem
Perhaps a more prominent issue that continues to go unaddressed is the inadequate amount of healthy young adult enrollment. Mandates that went into effect when Obamacare became law required insurers to accept all persons, regardless of whether or not they had preexisting conditions. This influx of high-cost patients was expected to be countered with healthy young adults who'd be coerced to enroll by the Shared Responsibility Payment. The SRP is the penalty you're supposed to pay come tax time for not purchasing health insurance. However, the SRP hasn't done its intended job.
According to an analysis from the Kaiser Family Foundation in late 2015, the average uninsured household was expected to pay an SRP of $969 in 2016. For added context, the SRP in 2016 was the greater of $695 or 2.5% of modified adjusted gross income. But as noted, the average bronze level premium for an unsubsidized individual in 2017 was over $3,700. In other words, young people could choose to remain uninsured and save over $2,700.
As the icing on the cake, Trump signed an executive order in January easing the burdens of Obamacare, which meant federal tax forms could once again be sent in without line 61 filled out -- this is the line where consumers who don't have health insurance indicate what they paid in SRP.
Uncertainty and the SRP failing to do its job are why you'll be paying so much more in 2018. As a result of these issues, a number of national insurers have reduced or cut their coverage entirely. Aetna (AET) and Humana (HUM 1.80%), which had been planning to merge, but were denied by regulators, slashed their county-based coverage by nearly 70% and 90%, respectively, this year, and have announced they want no part of the ACA in 2018. Similarly, the largest healthcare company in the U.S., UnitedHealth Group (UNH 4.12%), cut the number of states it operates in by more than 90% in 2017. Even Anthem (ELV 5.07%), which has benefited from its focus on government-sponsored consumers, has announced that it's pulling out of a number of markets.
If insurers don't view Obamacare as sustainable, then premium prices are likely to continue motoring higher.
