Many insurers want double-digit rate increases, but there are ways to save yourself unpleasant surprises
If insurance companies want to sell health insurance in the Affordable Care Act (ACA) market in the year 2018, today is the deadline to submit applications for the rates they wish to collect.
Applications can provide insight into what consumers planning to buy in the market expect next year.
The deadline is critical because a company that operates in federally controlled markets must submit the rate request for the states in which it wishes to operate or will be excluded next year. Therefore, consumers can see which companies will be and which will not be by 2018, and which markets may have fewer insurance companies, or none at all.
“If it happens that many companies are disengaging, that’s certainly a big concern,” said Chris Jacobs, health policy analyst and CEO of Juniper Research Group.
Of the remaining insurers, many are expected to request significant rate increases for the third consecutive year. In the approximately 12 states that have shorter deadlines, more than half of major insurers have called for more than 20% rate increases.
A large survey by Oliver Wyman, a consulting firm, found that 43% of insurers are planning to ask for rate increases with an average of over 20%, and 36% want premium increases of 10-20%. The rest say they will ask for increases around 8 to 10%.
The tariff presentations are only the first step. These applications must be approved by the states and the federal government prior to the open enrollment for the year 2018 beginning in early November.
And until insurers sign contracts with the federal government to determine which policies to offer, which can happen by the end of September, companies can change their minds and withdraw from the market. Earlier this year, some major insurers such as Humana and Aetna said they would withdraw from the market.
“We have witnessed some major outflows from major insurers,” said Katherine Hempstead, senior adviser working on health insurance and health policy issues at the Robert Wood Johnson Foundation.
But Hempstead believes that the idea that ACA insurance markets are dying out is exaggerated. It points out that some companies that have withdrawn, including Humana and Aetna, did not play an important role in the market and that, from these releases, other companies have taken a step forward to cover those places. Last week, insurance company Centene announced it plans to enter three new states next year and expand into another six states. In addition, Washington insurance regulator Premera Blue Cross, which said it would stop selling individual plans in two counties, will now offer two plans in those regions in 2018. Oscar Health, which was founded in New York, announced that it will enter into Ohio and Tennessee for the first time, will return to New Jersey and expand in California and Texas.
What drives the increase in premiums?
Next year could be the third consecutive year of sharp increases in tariffs for plans in the ACA market, which went into full effect in 2014. This year, premiums increased an average of 25%, and by 2016, 12 %, according to HealthPocket, a technology company that analyzes and compares health plans. This has infuriated many consumers, particularly those who do not qualify for tax deductions that significantly reduce premiums and out-of-pocket costs for deductibles and copayments. That’s 15% of all people who buy health insurance through the ACA.
According to experts, rates have risen in recent years because, at the outset, the companies rated the policies below the real value. In addition, payments that the federal government provided to companies to cover the expenses of high-cost affiliates were eliminated. In some states that did not expand the Medicaid program, more sick people with high costs for health coverage turned to the ACA market, raising insurance costs.
However, tariff increases for 2018 were expected to be more moderate. In a new report, the credit rating company S & P Global Ratings predicted an increase with an average of 15% in 2018 and that, in the future, the market would continue to stabilize.
According to the S & P report, “If the situation stays normal, we expect 2018 premiums to increase at a much slower pace than in 2017.”
But this year, with the Trump administration and the Republican congressional votes to repeal and replace the ACA with no clear plan to replace it yet, that price moderation is not happening. Instead, all the uncertainty means that insurers have to consider unexpected factors in pricing. Two of these main factors are:
Uncertainty about insurers’ subsidies. Insurers are particularly concerned about whether the federal government will reimburse them $ 7 billion for the cost-sharing reductions (CSRs) they must provide to consumers. Insurers are required to pay in advance to reduce the out-of-pocket medical costs of low-income people, and are then reimbursed by the federal government. Trump management has covered CSRs on a monthly basis with no commitment to the future.
In the national insurer survey conducted by Oliver Wyman, 94% of insurers that offer plans in the ACA market today state that they intend to stay in the market; 6% intend to retire. But if the federal government fails to cover CSRs, 42% of insurers say they will withdraw. In addition, 58% stated that they would revise the increase in the requested rate to reflect that higher cost.
Uncertainty about how many healthy people will enroll. The individual mandate of the ACA exists to convince healthy young people to buy insurance and thus offset the cost for the sickest people. Under the ACA, with few exceptions, people who do not buy insurance must pay a substantial fine. Earlier this year, the IRS announced it would accept tax returns without evidence of health coverage. People who do not have insurance still owe the fine, but the IRS will not delay your tax return if you do not provide that information. If the fine is not strictly enforced, healthier people are more likely than not to get health insurance, which would increase costs, says Beth Fritchen, partner and actuary for Oliver Wyman.
How to get affordable quality insurance
Despite all the uncertainty, there are steps consumers can take to choose wisely.
• Pay attention to deadlines. This year, the open enrollment time period during which you can enroll for an ACA plan in the federal market is shorter. In almost all cases it will be 45 days, lowered from 90 days, and will take place from November 1 to December 15. But for states that run their own markets, dates may vary and provide more time or different dates; so check back in the fall and take enough time to consider the options.
• Get what you deserve. About 85% of the 11 million people who are enrolled in the ACA plans get tax deductions that can significantly reduce premium costs. The average premium without the tax deductions for a Silver or Silver plan is $ 433 for 2017, but with tax deductions, monthly premiums average only $ 75. However, according to a Commonwealth Fund report, half of the uninsured adults do not even know they can get financial help to buy plans in the markets. According to the Department of Health and Human Services (HHS) in a report of 2016; 1.1 million people could also have been helped to pay out-of-pocket costs through CSR co-financing grants. To find out if you qualify for financial aid, visit healthcare.gov.
• Buy strategically. You can qualify for tax deductions only if you sign up for a market policy, and you can get help with co-financing only with a Silver plan. Do not automatically re-enroll in the same plan if you had one in 2017. Tax deductions can be used in any market plan, but are linked to the lower-cost Silver plan in your area and this may change from year to year. If you are in a state with a market without insurers for the year 2018, you can make an over-the-counter transaction and purchase insurance in the private market by an intermediary or directly from an insurance company, although you will not be eligible for a subsidy to reduce your premium. Keep in mind that a private plan may have a low premium but a coverage that is not as complete. If you get a plan that does not meet the mandatory coverage requirements of the ACA, you will be subject to the IRS fine.