Trump administration policies could account for $1,000 average increase in ACA premiums

Health insurance, pen and stethoscope
The majority of states will see annual benchmark premiums increase at least $1,000 thanks to two recent federal policy changes. (Getty/Minerva Studio)

Federal policy changes backed by the Trump administration could increase average annual premiums for benchmark plans by more than $1,000, according to a new analysis.

And in some states, annual premiums could increase more than $2,000.

An analysis published by the left-leaning Center for American Progress (CAP) isolated the financial impact of short-term plan expansion and the individual mandate repeal on premiums for benchmark plans in each state. The analysis applied the Urban Institute’s projected (PDF) annual increases associated with the two federal policy changes to last year’s state-by-state premiums reported by the Kaiser Family Foundation to arrive at a dollar figure for 2019 increases in each state.

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The impact of the two policies varies widely from state-to-state, according to the analysis. For example, a 40-year-old in Wyoming could pay as much as $2,066 more in annual premiums for a benchmark plan because of federal efforts to expand short-term plans and the individual mandate repeal.

States with largest projected annual benchmark premium increase due to federal policy changes
Wyoming $2,066
Nebraska $2,009
Tennessee $1,727
Oklahoma $1,582
Alabama $1,548
Source: Center for American Progress

Meanwhile, residents in Massachusetts would feel no impact whatsoever, since the state has its own individual mandate and state law prevents the expansion of short-term limited duration plans. States like New York and New Jersey, with similar restrictions around short-term plans, would feel less of an impact compared to other states, with a projected increase of $572 and $578 respectively.

RELATED: CMS actuary—Short-term plans lead to higher premiums, steeper enrollment drops

More than 30 states would see the average benchmark premium for a 40-year-old increase by more than $1,000. Some state policymakers are already considering ways to stabilize their marketplace, and these hikes could drive further action, said Thomas Huelskoetter, a health policy analyst of CAP.

In 18 states, the policies would drive up premiums by at least 19%.

“There are definitely some states that are better off because of policy decisions they’ve made to stabilize the market,” he told FierceHealthcare.

States with smallest projected annual benchmark premium increase due to federal policy changes
Massachusetts  $0                   
Oregon $484
New Mexico $484
Minnesota $549
District of Columbia $566
Source: Center for American Progress

In February, the Centers for Medicare & Medicaid Services (CMS) proposed lengthening the period for short-term plans from three months to 12 months. Industry groups quickly condemned the policy, citing higher premiums as a potential consequence.

CMS Administrator Seema Verma has said expanding short-term plans would give consumers more options and have little impact on the exchanges. She estimated the policy would siphon off 100,000-200,000 beneficiaries from the ACA marketplaces, but a CMS actuary pegged that number closer to 800,000.

RELATED: Early 2019 ACA premium filings show double-digit hikes; insurers blame Trump and GOP

Early state filings have already shown double-digit premium increases in Virginia and Maryland. Insurers in those states cited short-term plans and the individual mandate repeal as reasons for the proposed hikes.

For most people, the premium increases will be largely offset by subsidies. But consumers that don’t qualify will have to pay out-of-pocket or leave the exchanges for less comprehensive short-term plans, created as “a parallel market” to get around ACA consumer protections, according to Huelskoetter.

“There are still people who are going to see their premiums go up, and it didn’t have to happen,” he said.