Dylan Scott | Vox | 10/28/2019
Obamacare premiums will stay flat in 2020 — and in many of the states that have aggressively intervened to support their insurance markets, rates are going to be lower next year.
2020 is looking like a bit of a breakthrough for the Affordable Care Act’s marketplaces. Nationwide, the average change in unsubsidized premiums is just a 0.1 percent increase, according to analysis by the invaluable Charles Gaba, who writes at ACASignups.net. (His website has the final approved rates for 28 states; the average could change slightly as we get more data from the other states, but probably not by much. The average requested rate increase was less than 1 percent.)
From 2015 to 2018, premiums had increased by double digits, hitting a high of 28 percent in 2018, before slowing to a 2.8 percent increase in 2019. If Gaba’s math holds up, 2020 would see the lowest average premium increase for the Obamacare markets to date.
Of course, we don’t have a national health insurance market, and there is notable variation across the states. Vermont (11.5 percent average increase) and New Jersey (8.7 percent) are on the high end — though Gaba projects that, without its state individual mandate and reinsurance program, premiums in New Jersey would have increased by as much as 30 percent.
That’s a common theme across the rate filings: States that have taken steps to shore up their insurance markets (usually through a reinsurance program, which pays health insurers on the back end for their most expensive patients) are seeing their premiums decline at a healthy rate.
A few examples:
- Colorado, with a newly approved reinsurance program, sets the pace nationally with an average premium decrease of 20.2 percent
- Montana, which had its reinsurance plan approved in August, saw a 13.1 percent decrease in the average premium
- In North Dakota, also with a brand-new reinsurance waiver, premiums will decline by 5.8 percent
- Wisconsin, now in the second year of its reinsurance plan, is enjoying a 3.2 percent drop in the average premium
- Rhode Island instituted a state individual mandate and started a reinsurance program in 2019, and its average premium will decrease by 0.5 percent
California, meanwhile, has set a new standard for states being aggressive about keeping health insurance affordable. The average unsubsidized rate increase there is 0.9 percent (sans reinsurance but with a new individual mandate), but the state is also for the first time expanding who is eligible for premium subsidies.
Obamacare provides subsidies for people making up to 400 percent of the federal poverty level; California is increasing the threshold to 600 percent for 2020 and increasing the subsidies beyond what’s offered under the ACA for people with lower incomes. California’s insurance marketplace estimates that 235,000 people who previously did not qualify for subsidies should see their premiums at least partially covered by the new state program. Nearly 700,000 others will see their subsidies enhanced.
I asked Cynthia Cox, who tracks the ACA markets for the Kaiser Family Foundation, for her take on the state of Obamacare. Her takeaway: “stronger than expected.”
“Many people watching the market were concerned about the effect of the effective repeal of the mandate penalty and expansion of loosely regulated plans,” she said. “But insurer financial performance has nevertheless remained strong, more companies are entering the market, premiums are dropping a bit, enrollment hasn’t fallen off as much as expected, and the folks signed up don’t appear to be significantly sicker. I think all of those are good signs for the future of the market.”
That’s all good news. There is one word of warning, however, covered by Gaba as well as friends of the newsletter David Anderson and Andrew Sprung. As premiums decrease for the benchmark insurance plan that is used to calculate the size of the Obamacare subsidies, that decreases the value of the subsidy.
The cost of the benchmark plan stays the same (it’s pegged to a percentage of income), but a slightly smaller subsidy means buying another plan (one that has a higher or lower deductible than the benchmark plan) could end up being more expensive for the customer this year than it was last year.
It’s not clear how big of a problem this will really be; Sprung observes in his analysis that for some of the counties with the largest share of Obamacare enrollees, the differences should be minimal for the most part.
But it’s a useful reminder that consumers would do well to shop around and make sure they’re getting the best deal. Open enrollment starts November 1.
This post was updated to correct the year of the highest average Obamacare premium increase. It was 2018, not 2017.
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