The folks at Grow asked me to take a look at what the latest actions from the administration will mean for your health care premiums. Not an easy question to answer. Some of what I found is below, but you can read the full story at Grow. Mainly, my concern is that we are witnessing a massive political stunt, designed to maximize the stick shocker people will have come Nov. 1-ish, when the real costs (and policy downgrades) will become obvious. Angry Americans will then accept almost anything as a “fix.” We’ll see.
After months of inaction by Congress, President DonaldTrump took a mighty swipe with his pen last week and dramatically changed the American health care system. Politics aside, here’s a look at what he did and how it might impact you. If you are a gig economy worker or buy health insurance on your own, you’ll need to pay particularly close attention — but all Americans could be impacted by this. As with everything happening in Washington, Trump’s steps are part policy, part negotiating tactic, so nothing is final. But here’s where we are today.
What did Trump do? Two things. The first is more mundane, and the impacts are more long-tern. On Oct. 12, he signed an executive order promoting a series of changes that conservatives have long supported. Among them: supporting purchase of health insurance across state lines; making short-term, minimum coverage policies more available; expanding the use of health reimbursement arrangements; and making it easier for some groups to band together and purchase group health plans.
The next day, Trump took a far more controversial, and immediate, step: He announced the end of so-called “cost sharing” subsidies paid by the government to insurance companies designed to keep down the cost of deductibles for lower-income policy holders. The payments could stop as soon as this month, though members of Congress are trying to legislate a fix.
Let’s start with the cost-sharing payment announcement. Coming right before insurance companies settle on their final monthly premiums before open enrollment period begins Nov. 1, this look like a big blow to folks who buy their own insurance. Insurance companies will raise rates an estimated 20 percent to cover the shortfall, according to the Congressional Budget Office. But let’s back up and clear up some terminology to be clear about who will bear the brunt of this step. We’re doing to do that by avoiding use of the term “Obamacare,” which tends to be imprecise.
Consumer who buy insurance themselves — either through the exchanges, with or without subsidies, or directly from insurance companies — still represent a minority of Americans. The Kaiser Family Foundation says about half of Americans (49%) get insurance through work, or about 150 million people. That compares with 12 million who purchased insurance through an exchange last year, and another 5 million who purchased policies directly, according to calculations by Robert Laszewski is president of Health Policy and Strategy Associates. In total, that’s 17 million Americans in this so-called “non-group” market. (Most of the rest are covered by Medicare, Medicaid, or don’t have coverage at all)
Trump’s step to end cost sharing subsidies only impacts this group of 17 million. However, roughly 10 million of the 12 million exchange buyers qualify for subsidies that reduce their monthly premiums. If insurance firms raise premiums in reaction to this step, their government subsidies will rise by the same amount, so they are protected.
The rest of this group — 5 million who buy on their own, and another 2 million who buy on the exchange but pay full price — will likely get hit square between the eyes by that 20 percent projected increase. (That’s me, by the way!) And that’s on top of increases that were already proposed, such as CareFirst’s 50% rate increase request in Maryland.
That sounds bleak, but it could still change. Congress could pass legislation that explicitly permits the subsidy payments, and there’s talk of that. And several states have said they will sue to reinstate the subsidies. So stay tuned.
As for Trump’s measures from the executive order, changes they bring won’t arrive immediately. Many wouldn’t take effect until next year’s open enrollment period, at the earliest. The order calls for regulations making short-term plans more available by issued within 60 days, so it’s possible consumers interested in those plans could have more alternatives sooner.
All of this is dependent on what action Congress might take during the next 12 months, however.