- Due to ongoing federal uncertainty, premium increases for every state could range between 12 and 32 percent in 2019 with cumulative increases ranging between approximately 35 percent and 90 percent through 2021.
- Due to specific conditions unique to their region, 17 states are at greater risk of experiencing cumulative premium increases of 90 percent or more, and an additional 19 states could be at risk of experiencing hikes of 50 percent or more.
- Several policy actions at both the federal and state level, including reinsurance, could reduce premium increases and help millions of middle-class Americans maintain their coverage and access.
A new analysis finds that every state in the nation is at risk for higher than normal premium increases due to continued policy changes and uncertainty at the federal level. In the absence of any federal action to address the current environment, the report estimates the premium increases across the nation could range between 12 and 32 percent in 2019; and have a cumulative total of between 36 and 94 percent by 2021.
"The challenges to our health care system are threatening to have real consequences for millions of Americans," said Peter V. Lee, executive director of Covered California, the sponsor of the study released today. "The prospect of 30 percent premium increases in 2019 and hikes of over 90 percent over the next three years will threaten the access to coverage for millions of Americans."
The report, "Major Indicators of Individual Market Stability Highlight High Premium Increases for States in Coming Years," (http://hbex.coveredca.com/data-research/library/CoveredCA_High_Premium_Increases_3-8-18.pdf) is a national economic analysis of potential premium increases, state-by-state impacts and estimates of positive effects of federal policies. The report was informed by actuaries at health plans and academics at the University of California Los Angeles, University of California San Diego and Harvard University as well as a review of recent published reports. In addition, Milliman provided actuarial modeling related to the potential impact of instituting a federal state-based invisible high risk pool or reinsurance program. The analysis was sponsored by Covered California as part of its efforts to understand future trends and inform the national policy discussion.
Milliman's complete report related to the potential impact of reinsurance can be found here: http://hbex.coveredca.com/data-research/library/Milliman_Reinsurance_Program_Estimates_2-14-2018.pdf.
The analysis also identifies steps that can be taken to reduce the risks of these significant premium increases. Among the solutions, the report includes an analysis of the positive impact that a federal reinsurance program could have on 2019 if implemented soon.
"We project that a nationwide reinsurance program with annual funding of $15 billion could result in average premium reductions of 16 percent to 18 percent," said Robert Cosway, consulting actuary at Milliman. "Lower premiums would impact both consumers and the amounts that the federal government pays in the form of tax credits. The marginal cost of the reinsurance program would be much lower than $15 billion when you consider the reduction in the cost of the federal government's tax credit payments."
Other policies that could reduce premiums or promote stability include: once again providing direct federal funding for the required cost-sharing reduction subsidies, which help low-income consumers with lower copays and deductibles; increasing spending in federal marketplace states on marketing to promote enrollment among healthier individuals, which yields a very positive return on investment, with the beneficiaries of that investment being federal taxpayers; and state policies to promote enrollment or protect consumers from the potential of new health insurance products that will surprise them with huge gaps in coverage and lead to siphoning off of healthier people from individual markets' risk pool.
In addition to the projected premium increases, the analysis uses key indicators of marketplace stability to assess which states are more or less likely to be at risk of experiencing catastrophic rate changes.
According to the report, every state is at risk of cumulative premium increases of at least 35 percent over the next three years. A total of 17 states could face premium increases that could exceed 90 percent during that time and an additional 19 states could face increases of 50 percent or more due to a variety of factors including: the recent decision to remove the federal penalty for being uninsured; the administration's attempt to introduce new short-term plans that may damage the overall risk mix of consumer pools by siphoning off healthy consumers; and the continued under-investment in federal marketing and outreach.
"Health care is local and the impacts of the changes in federal policy will play out differently across the nation," Lee said, "The conclusion is that there are no 'winners' — rather the range of impacts is from bad to very bad."
While subsidized consumers would be insulated from these increases, which would also increase the amount of financial assistance they receive, unsubsidized consumers would bear the full weight of the higher premiums. A previous Covered California study estimated that 6 million Americans on the individual market, both on- and off-exchange, do not receive subsidies and have a median income of $75,000.
"Lower income Americans will be largely shielded from these price hikes, but the real-world consequences for middle-class Americans who do not receive any financial assistance in the form of tax credits, is that many will be priced out of having health insurance," Lee said.
The analysis, which provides a snapshot and projection for potential premium hikes for every state in the nation is available in an interactive map which can be found here (http://hbex.coveredca.com/data-research/data-viz/individual-market-risks-by-state-2019/).