Report: ACA premiums 16% higher than they would have been with individual mandate

Donald Trump speaking
Actions by the Trump administration on healthcare, including the repeal of cost-sharing reduction payments and the individual mandate, have already increased the rate of premium growth for next year. (whitehouse.gov)

Insurance premiums for plans sold on the ACA exchanges will be lower this year, on average.

But they could have been at least 16% lower in 2019 without certain actions by the Trump administration, The Kaiser Family Foundation found in a recent analysis.

Although Republicans in Congress were unsuccessful in entirely repealing the Affordable Care Act after Trump's election, they have since worked to remove some of the mechanism meant to pay for the law.

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For instance, Congress repealed the individual mandate in the 2018 tax reform law—raising premiums by 6%, on average, according to Kaiser—as part of its massive tax package passed last year.

CMS announced a halt to cost-sharing reduction payments and expanded short-term insurance plans. The Congressional Budget Office previously found that the repeal of cost-sharing reduction payments increased silver premiums by an average of 10%.

For this report, Kaiser used insurer rate filings to isolate the effect of these policies on 2019 premiums. Kaiser found, in particular, on-exchange silver premiums will be 16% higher on average than they would have been.

These results directly contradict CMS' characterization of the administration's policies, which Administrator Seema Verma described as stabilizing the individual markets. They show that even while premiums may be dropping in some areas, they are still higher than they would have been without government action.

For instance, Kaiser found in states experiencing higher-than-average premium increases, the result of the individual mandate repeal raised premiums as high as 10%.

RELATED: Average ACA premiums dip as Verma takes aim at critics

"A separate analysis finds that 2019 premiums on the whole are staying relatively flat or dropping in many parts of the country, in large part because insurers are currently overpriced. Nonetheless, this analysis finds that 2019 premiums would be dropping even more if the individual mandate penalty were still in full effect," the researchers wrote.

That's because insurers overpriced their 2018 premium hikes in anticipation for ACA repeal, Kaiser argued, saying insurers could have decreased premiums even more in 2019.

Those insurers that didn't increase premiums as much in 2018 had larger average rate increases resulting from the individual mandate repeal.

 

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