Eyes on the unsubsidized: With no shield from rate hikes, some face unaffordable plan options

stethoscope on money
Unsubsidized individuals’ premiums vary widely depending on where they live, in part due to state regulators' decisions. (Getty/Maudib)

While government subsidies will shield many consumers from steep premium increases next year, it’s also crucial to consider how these rate hikes affect the unsubsidized—as growth in the individual market largely depends on them.

That was the driving force behind a new analysis from the Robert Wood Johnson Foundation’s Katherine Hempstead, which tracked the impact of premium increases for the 7.4 million unsubsidized individual market consumers by examining premiums for the least expensive bronze plan. On a national level, Hempstead found that the average lowest-price bronze plan increased 20% between 2017 and 2018—from about $250 to about $300.

While that’s lower than the 37% average premium increase for the “benchmark” silver plan on the exchanges, silver-plan customers who are eligible for tax credits may actually end up paying a lower portion of their premiums compared to prior years—especially if they switch metal levels. Unsubsidized customers, on the other hand, bear the full brunt of rate increases.

Unsubsidized individuals’ premiums also vary widely depending on where they live, Hempstead noted. For example, in the most expensive 15 states, the monthly premium for a 27-year old buying the least expensive bronze plan exceeds $335—which is the threshold for an affordability exemption from the individual mandate for someone with an income of $50,000. But 10 states saw an increase of less than 5% in their cheapest bronze plan.

One reason for that variation is the different ways states reacted to the Trump administration’s decision to stop funding cost-sharing reduction subsidies, the analysis said. Some states responded by “silver-loading”—or increasing silver plan premiums relative to other metal levels—while others raised premiums on all products.

RELATED: California slaps surcharge on ACA plans as Trump remains coy on cost-sharing subsidies

Unsubsidized consumers likely fare better in states that opted for silver-loading, since hiking premiums for just one metal level gave those individuals a category of plans to avoid.

Given the results of her analysis, Hempstead concluded that efforts to improve plan affordability for unsubsidized consumers is “decidedly mixed.” And that may not bode well for future individual market growth, given the fact that this market segment has the lowest-take up rate and is most likely to opt for limited coverage plans.

In fact, the Trump administration and Republican lawmakers want to ease the Affordable Care Act’s restrictions on short-term policies—a move that might be popular with consumers but could also destabilize the overall individual market.