Big changes are in store for consumers who are planning to purchase an Obamacare (officially the Affordable Care Act, or ACA) plan in 2018. Though the enrollment period is ongoing and remains the same as in 2017 (Nov. 1 through Dec. 15, in most states), there are important differences to be aware of this time around.
Perhaps the biggest shift is the end of cost-sharing reductions, or CSRs. Cost-sharing reductions are one of the two core subsidies tied to Obamacare for low- and middle-income individuals and families. Advanced Premium Tax Credits (APTC), which will still be paid by the federal government to those earning up to 400% of the federal poverty level, help lower monthly premium costs, while CSRs reduce the copays, coinsurance, and deductibles tied to a doctor visit. Cost-sharing reductions had been given to folks who purchased a silver level plan and earned up to 250% of the federal poverty level.
Recently, President Trump announced that he would be ending the payment of CSRs to more than 6 million people as a result of a long-standing legal case involving House Republicans. Back in 2014, the House GOP sued the then-head of the Department of Health and Human Services, Sylvia Burwell, alleging that CSR payments needed to be properly apportioned by Congress, which wasn't happening. By 2016, Republicans won their case, but the federal judge who made the ruling stayed the verdict with the expectation that the Obama administration would appeal (which did happen). That appeal had been ongoing through the end of the Obama administration and into the Trump administration. After repeated unsuccessful attempts to use this dangling carrot to coerce Congress to repeal and replace Obamacare, Trump held to his word and deployed his "nuclear option" by dropping the appeal and ending cost-sharing reductions.
How much can the average American expect to pay for an Obamacare plan in 2018?
The end of CSRs will be very significant for consumers and insurers in the upcoming year. Some 6 million consumers who'd previously qualified for this cost-saving reduction may find that going to the doctor is simply too costly. Others may still choose to receive medical care and leave their insurance company with a bill they can't afford to pay.
As a result of CSR's being axed, insurance companies on the Affordable Care Act's marketplace exchanges have passed along enormous premium price increases to consumers. What does "enormous" mean? According to the Department of Health and Human Services, the average benchmark plan -- the second-lowest-cost silver plan -- will be increasing by 37% in 2018 from the previous year to $411 a month. Keep in mind, this is for an unsubsidized individual who makes more than 400% of the federal poverty level.
A separate analysis from Obamacare.net examined the national average monthly premium for a single, unsubsidized, 30-year-old nonsmoker in 2018 and came up with the following figures:
- Bronze plan: $379 a month ($4,548 annually)
- Silver plan: $478 a month ($5,736 annually)
- Gold plan: $545 a month ($6,540 annually)
- Platinum plan: $682 a month ($8,184 annually)
Based on the above, even a bronze plan would be practically unaffordable for most middle-class individuals and families in the upcoming year. In total, bronze plan premiums are rising by nearly 22%, silver plans by more than 30%, gold plans by 17%, and platinum plans by 23%. Around four out of five enrollees typically choose a silver or bronze plan.
There are other factors at work here, too. Your location will certainly have some bearing, with residents in remote states, like Wyoming and Alaska, traditionally paying more for health insurance, and residents in higher population areas, where access to sophisticated medical equipment is nearby, paying less. Tobacco users can also be on the hook for up to a 50% premium surcharge, depending on the state.
Will we see a silver plan exodus in 2018 or an ACA exodus?
The big question is: What sort of negative impact can we expect higher premiums to have on enrollment in 2018?
In years past, a majority of enrollees chose a silver plan, even though bronze plans were cheaper on a monthly basis, because CSRs would only be paid to those who purchased a silver plan. Without CSRs in the upcoming year, it'll be interesting to see if these same folks choose to step down a notch on the ladder, even if they're getting the APTC, and purchase a bronze plan instead in order to save a few bucks.
Another possibility is that we see an exodus from the ACA exchanges altogether. As noted, the more than 6 million people adversely impacted by the loss of CSRs may not have a means to pay for their visits to the doctor without subsidies. That could mean stiffing insurers following a doctor's visit or not bothering with enrollment at all.
Making matters even worse for consumers is the lack of choice in 2018. A number of national insurers have significantly reduced their coverage options or headed for the exit altogether. Both Aetna (NYSE:AET) and Humana (NYSE:HUM), which had once planned to merge and were denied by regulators, announced their exit from the ACA exchanges, effective in 2018. Meanwhile, UnitedHealth Group (NYSE:UNH) has slashed its state coverage by more than 90% from what it was in 2016, and Anthem (NYSE:ANTM), one of the biggest beneficiaries of government-sponsored enrollees, has announced its departure from certain markets in 2018. Combine this with three-quarters of all healthcare cooperatives failing, and you have a recipe for fewer choices and higher premiums.
Whether ready or not, Congress is going to need to step up to the plate and talk healthcare reform in 2018. Otherwise, medical care may soon be unaffordable for a growing number of Americans.