Primarily because of “short-term market uncertainty,” the average premium for an Affordable Care Act benchmark plan will be about 15% higher in 2018 than it was in 2017, according to the Congressional Budget Office.
That uncertainty, the CBO noted in a new report (PDF), largely stems from the fact that insurers don’t know whether cost-sharing reduction payments will be funded next year.
President Donald Trump has threatened to end the payments, which are the subject of a federal court case challenging their legality. However, there is an effort underway in the Senate to pass a bipartisan ACA stabilization bill that could ensure funding for CSR payments for at least a year.
A previous report issued by the CBO estimated that if CSR payments were terminated after 2017, benchmark ACA plan premiums would rise by an average of 20% in 2018.
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Another factor that will put upward pressure on premiums next year is a projected increase in the percentage of the population living in areas with only one insurer in the ACA marketplace, the CBO noted. The lower market participation among insurers, unsurprisingly, is driven in part about uncertainty over the Trump administration’s handling of the ACA.
Currently, there are set to be 63 counties in Virginia without an exchange insurer next year, though that could still change leading up to the Sept. 27 deadline for insurers to finalize their plans.
Yet the CBO also estimated that if the law’s subsidies and other basic rules stay in place, there will be sufficient demand for individual market coverage to ensure that in each of the next 10 years, fewer than one-half of 1% of people in the country will live in areas where no insurers participate in the market. The CBO also estimated that premiums would rise by an average of just 5% annually between 2017 and 2027 if the ACA remains intact.
The agency's latest findings are significant not only because they underscore the urgency of the Senate’s effort to secure funding for CSR payments, but also because they undermine the Trump administration’s claims that the ACA is collapsing under its own weight. In fact, the report’s projections about the effect of uncertainty on premium increases suggests that the administration’s own actions might be causing harm.
In addition, the CBO estimates that the projected increase in ACA exchange plan enrollment next year—from 10 million to 11 million—will be limited by “near-term market uncertainty and by announced reductions in federal advertising, outreach, the enrollment period and other enrollment efforts.”
In other words, the administration’s decision to shorten the open enrollment period and slash outreach funding will likely depress enrollment.