Analysis Forecasts 2018 Premium Changes for Exchange Plans Amidst Uncertainty

As the deadline for insurers to submit their intended premiums for 2018 rapidly approaches, a new report from the Kaiser Family Foundation examines preliminary data on premium rates and plan offerings on the Affordable Care Act (ACA)’s exchanges.

The report noted that the data it uses are preliminary and may change before they are finalized by September 27, the deadline for insurers to sign a contract outlining exchange offerings and premiums for the next year. It included information from 20 states and the District of Columbia gathered from public rate filings, using the second-lowest cost silver plan in a major city as its benchmark.

Researchers found that the premiums for such plans are anticipated to increase in most locations, although the amount of increase varies widely. Because these rates reflect the cost before the tax credit is applied, the amount of the ACA’s tax credit will also increase in most areas to cap the premium amount paid by the hypothetical single 40-year-old non-smoker making $30,000 per year. In all areas, the cost after the tax credit is set at $201, down slightly from $207 last year.

The analysis also looked at insurer participation, finding that the average number of insurers participating in each state’s exchanges has declined to 5.1 in 2017 from a peak of 6.7 in 2015. Currently, an average of 4.6 insurers intend to participate in each state for 2018, although this figure is subject to change before the contract deadline.

Based on the rate filings examined, the researchers concluded that uncertainty surrounding health policy has contributed to decisions by insurers to raise premiums or retreat from the marketplaces. A legislative battle over repealing and replacing the ACA had been ongoing while insurers were attempting to determine premiums for 2018, although it now appears that the law will not be repealed.

Furthermore, the Trump administration has indicated it might stop enforcing the law’s individual mandate or cease the cost-sharing subsidies paid to insurers, and some plans have accounted for those situations in their premiums. The data in the report indicate that insurers have factored an additional 1.2% to 20% in their premium increases assuming the end of the mandate, and an additional 2% to 23% assuming the subsidy payments end.

The researchers identified another group who will feel the effects of this uncertainty: consumers. Taxpayers will have to offset the cost of higher premiums because the subsidies must increase as well, and consumers who buy insurance outside of the exchanges are not eligible for subsidies and will bear the full impact of premium hikes. The authors noted that these effects could threaten the stability of the individual market if no policy changes are enacted.

“Although the individual market on average has been stabilizing, the concern remains that another year of steep premium increases could cause healthy people (particularly those buying off-exchange) to drop their coverage, potentially leading to further rate hikes or insurer exits,” they concluded.