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Health Insurance Premiums Down Nationwide for 2019

The Trump administration is taking credit for a recent 1.5 percent drop in 2019 premiums for the second-lowest silver plan under Obamacare. This is the benchmark health care coverage level that subsidies are based upon. This year, the largest premium reduction is in Tennessee, with a 26.2 percent decrease. Seema Verma, Administrator for the Centers for Medicare and Medicaid Services (CMS), says that efforts by the administration to stabilize prices led to the reduction. The big picture is more complicated, however.

This year, the same plan experienced a 37 percent rate hike, and last year the premiums rose 25 percent. The latest drop is actually a slight downward adjustment to overall increases in premiums for those covered under the Affordable Care Act (ACA) for the past two years. Insurers say that uncertainty about previously approved government cost-sharing reimbursements and enforcement of the individual mandate were factors in the increases. The nonpartisan Kaiser Family Foundation determined that premiums would have risen only slightly during both years if not for changes in policies affecting the ACA.

At one point in 2017, it appeared that several counties would not have access to an insurance provider under Obamacare. The CMS took steps to stabilize the insurance market, including reducing burdensome and overlapping regulations. Allowing reinsurance programs in several states was another step that gave insurance providers more confidence in the ACA. Reinsurance provides state and federal funding assistance for exceptionally high claims that erode insurance companies’ profits. ACA premiums will decrease in 2019 for states that have reinsurance programs, but they’ll still be higher than they were before 2018.

This year, the Trump administration has eliminated the penalty for those who go without health insurance. The original legislation was designed to allow insurers to charge lower premiums due to the high numbers of insured. In addition, short term health plans have been expanded under new regulations, allowing people to purchase these plans for up to nearly a year. One drawback here is that almost none of these plans cover pre-existing conditions, and most of them don’t cover substance abuse treatment, pregnancy and childbirth care, or prescription drug costs. Critics are also concerned that short term coverage could draw people away from major medical plans that need high enrollment to keep rates down.

Insurers lost money in the beginning under the ACA, but increased enrollment each year was expected to make up for the initial cost to insurance providers. Aside from withholding cost-sharing funds, the administration also cut funding for Obamacare marketing and outreach by 90 percent. Surprisingly, the overall number of enrollees grew to 8.7 million even without this support. The large rate jump last year was meant to accommodate the cancellation of cost-sharing reimbursements for insurers, and participating insurers began to turn a profit.

To benefit from lower premiums, some people will have to change to a different network or set of healthcare providers. States are required to ensure adequate networks and reasonable availability of providers. For the benchmark silver plan, the actual cost may not decrease as subsidies go down along with lower rates.

The decrease in rates applies to the 39 states that participate in the federal exchange site at The District of Columbia and 11 states run their own exchanges. Although rates have increased in some states as they’ve gone down in others, there’s also a trend for premiums to have less variation from one state to another, making them more equitable.

The profitability for insurance providers should help keep insurers in the marketplace, which in turn should keep current customers coming back – while attracting new business to the table. Per Seema Verma, 23 more insurers are participating on the exchanges for 2019, and those already participating are expanding their geographic reach. Although small, the 1.5 percent reduction in average premiums nationwide represents a big change from the increases we’ve gotten used to, and it could be a positive sign for the future of the ACA.

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