According to officials who run the Covered California exchange, the state has a stable individual health insurance marketplace and so do other states under the Affordable Care Act.
They fear, however, that President Donald Trump and Republican leaders could destabilize the individual insurance market by not enforcing the ACA’s individual mandate, which requires consumers to have coverage, and by stopping federal support for cost-sharing subsidies that help low-income residents pay for medical costs.
Covered California commissioned an analysis by PricewaterhouseCoopers on what could happen in the Golden State’s individual insurance market in 2018. About 2.4 million Californians purchase their own health insurance, including 1.3 million who are insured though Covered California (Obamacare) and 1.1 million who shop around.
If the federal policies are changed, the analysis concluded:
▪ Individual market consumers could see premium increases between 28 and 49 percent in 2018.
▪ About 340,000 residents in California would no longer be insured.
▪ Healthier people would exit the insurance market, leaving a sicker group of consumers with insurance benefits and resulting in higher premiums.
Everyone in the individual market will be affected by policy changes in Washington, according to the report. People with coverage through an employer are not affected.
Trump reportedly has used funding for cost-sharing subsidies in bargaining with Democrats over budget items, such as front money for building the border wall between the United States and Mexico. The administration agreed this week to continue support for the subsidies, but has not said for how long. The subsidies also have been challenged in a court case filed by Republicans in the House of Representatives.
The president’s concluding remarks when the “repeal and replace” legislation was dropped last month was that Republicans should wait for the collapse of Obamacare and then replace it with something else.
Some GOP tampering could undermine the program and create real pain for consumers, according to the analysis done for Covered California.
“Failure to support cost-sharing reduction subsidies results in significant increases in premiums, in particular for unsubsidized Silver plans,” Sandra Hunt, a co-author and PwC principal, was quoted in a news release. “Fewer people would participate with these higher premiums, which would lead to a drop in coverage in the unsubsidized market.”
A law requires insurers to provide the cost-sharing benefits to eligible policyholders, regardless of whether they are reimbursed by the federal government, so insurers are expected to provide the discounts and then jack up premiums in 2018 to make up for the losses.
That part of the premium increase is estimated at 16 percent for Silver health plans. The 2018 premiums were already projected to rise by 9 percent, mostly due to an increase in medical costs, the analysis says.
If the federal government drops the tax penalty for not having insurance, California’s individual market is projected to shrink from 2.4 million people to 2.06 million. Those remaining in the pool would be less healthy consumers who hold onto their insurance. Insurers will have another reason for raising premiums and could think about leaving the market.
For those who are leery of an analysis paid for by Covered California, Robert Laszewski, an insurance industry consultant who writes a health reform blog, projected in interviews this week a 15 percent premium increase in 2018 if insurers lose federal support for cost-sharing subsidies, and another 15 percent due to realities in the Obamacare exchanges across the country.
The Covered California exchange has 11 different insurers offering health plans with various coverage levels in the different regions of the state. Four insurers make plans available in Stanislaus County.
Ken Carlson: 209-578-2321, @KenCarlson16