A new study by the Robert Wood Johnson Foundation, a healthcare education and advocacy group, has found that the re-establishment of certain subsidies implemented under Obamacare but repealed by President Trump last year may actually be detrimental to premium prices next year.
The study also found that Obamacare’s individual mandate was a positive for the insurance market and that repealing Obamacare’s essential health benefits may have long term adverse effects on markets, potentially turning the individual market into a “high-risk pool.”
The organization interviewed ten insurance companies participating in Obamacare’s individual market in twenty-eight states and Washington D.C. It found the elimination of Obamacare’s cost-sharing reduction (CSR) subsidies has had the unintended consequences of making health plans sold under the law actually more affordable.
President Trump announced last October, weeks before the beginning of open-enrollment for the 2018 coverage year, that his administration would stop reimbursing health insurance companies for the CSR reductions made to eligible individuals. Under the old CSR rules, individuals with incomes between 100% and 250% of the federal poverty line are eligible for plan-cost-reductions, such as reduced deductibles and co-payments.
Critics worried that the move would send premium prices soaring. RWJF found however, that eliminating CSR’s has increased consumers’ buying power.
Most states require insurers to concentrate premium hikes on mid-tier, or silver-level, plans. Because most purchasers of those plans are eligible for tax credit subsidies for the cost of their insurance, those tax credit subsidies commensurately increased. The result was, a decrease in the net-out-of-pocket expense for enrollees purchasing health plans across virtually all tiers.
Premiums for many gold-level plans dropped to levels below previous levels for silver-level plans, and premiums for many bronze-level plans went to $0. So good were the deals that many consumers are now getting that many of the executives interviewed are concerned about bills in Congress that are trying to re-establish CSR funding. They noted that they might cause confusion during the 2019 open enrollment season set to begin in the fall, and would lead to sticker shock for enrollees who purchased gold- or bronze-level plans this year.
Restoring CSR’s “is not helpful at all,” one representative said according to the study.
The report also found strong consensus that the repeal of Obamacare’s individual mandate would adversely affect the individual insurance market and premiums over time. The individual mandate was repealed as part of the GOP-led tax reform package passed last December.
Some representatives felt that the elimination of the mandate would ultimately collapse the market. Others said it is causing them to re-evaluate their continued participation in state marketplaces.
Intertwined with the decision to repeal the individual mandate is the decision by the administration to allow plans to be sold in the state exchanges that don’t cover all of Obamacare’s essential benefits. The increase in the availability of such plans, representatives predicted, would shift healthier individuals away from Obamacare-compliant plans. The result, they said would be a market where healthy individuals are able to buy the bare-bones plans but individuals needing more comprehensive plans would not find affordable options. Over time, one insurer said, the individual market will come to “look like a high-risk pool.”
President Trump made repealing Obamacare a main campaign promise during his presidential run, but repeated attempts to repeal and replace the law fell short in Congress last year. The administration has instead taken steps to weaken the law with directives not requiring Congressional approval.
The President has repeatedly said that having Obamacare fail will spur lawmakers on both sides of the aisle to compromise. “As I have always said, let ObamaCare fail and then come together and do a great healthcare plan. Stay tuned!” he tweeted last July after one failed repeal attempt.