Citing ongoing regulatory uncertainty, the California health benefit exchange forecasts statewide premiums could rise 16 to 30 percent for individual plans next year, assuming medical treatment costs will account for seven percent of the increase. In some states, rate increases could even be larger, the exchange noted in an analysis titled The Roller Coaster Continues — The Prospect for Individual Health Insurance Markets Nationally for 2019: Risk Factors,Uncertainty and Potential Benefits of Stabilizing Policies.
Issuers and states faced considerable challenges preparing for the 2018 plan year due to federal policy uncertainty. During the course of 2017, federal executive action shortened the open-enrollment period for the 2018 plan year, reduced the marketing and outreach budget for the 39 states in the federally facilitated marketplace by 90 percent, and ended cost-sharing reduction payments to issuers in October. The 2019 plan year has the potential to be just as uncertain and volatile, if not more so. Major policy changes for 2019 include setting the individual mandate tax penalty to zero for plan years 2019 and beyond, potential continuation of the minuscule marketing spending for the federal marketplace and the implementation of association health plans (AHPs) and short-term, limited-duration insurance plans, which could affect the market as early as 2019.
Households that earn above the 400 percent federal poverty level cutoff to qualify for premium tax subsidies will feel the pain of the increases most acutely. This comprises some six million households nationally with an estimated median income of $75,000 that struggle with the burden of high premiums, according to the report. Some observers argue that double digit rate increases for 2018 plans have already pushed those households over the affordability threshold. Covered California’s analysis pointed to policy options that could significantly mitigate the potential 2019 rate hikes in California and other states including:
- Funding state-based invisible high-risk pools or reinsurance programs could produce an average rate reduction of 12 percent with a range of 9 to 16 percent depending on the state;
- Restoring marketing and outreach funding in the federally facilitated state exchanges in 2019 could reduce rates between 2 and 4 percent; and
- Reinstituting the health insurance tax “holiday” for 2019 could reduce rates between 1 to 3 percent.
Covered California’s outlook comes as health plan issuers must determine their market presence and rates during the first half of this year. Consequently, it notes federal policymakers have only a short window of time to enact stabilization measures that could mitigate a significant share of the 2019 premium increase and keep issuers in the individual market that might otherwise exit in the current uncertain regulatory and market environment.
Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email email@example.com or call 530-295-1473.