Covered California has released their analysis of the 2019 health insurance market and predicts that without stabilization and other regulations some consumers could face a 30% increase in their health insurance premiums next year. The issue brief notes that State Based Marketplaces (SMB) such as Covered California have not lost as many consumers as the Federally Facilitated Marketplaces (Healthcare.gov), but federal regulations are damaging California’s ability to keep rates low for both on-exchange consumers and individuals and families who buy health insurance directly from a carrier.
Falling Enrollment, Lack Of Reform Will Increase Covered California Rates
One element for declining enrollment through Covered California must be attributed to lower unemployment and more people enrolling in employer sponsored health plans. For some markets this can leave an existing pool of less healthy consumers in those health insurance plans. Covered California notes that their new enrollees in 2017 had a risk score that was 16% lower than other measured marketplaces. In other words, people enrolling through Covered California had few chronic illnesses and utilized health care services less, which helps to keep the rates lower for everyone.
The analysis also highlights how consumers in subsidized plans saw their net premiums drop in 2018. This occurred, ironically, because the federal government stopped paying the Cost-Sharing Reduction subsidy for the enhanced Silver plans. To make up for the loss of funding, Covered California and other exchanges increased the price of Silver plans to make up for the lost funding. The second lowest cost silver plan in a consumer’s region is the basis for calculating the monthly Premium Tax Credit advanced to the consumer. Because the Silver plans were artificially inflated, consumers received larger monthly subsidies. This helped lower the net premium for plans not artificially inflated – Bronze, Gold, and Platinum.
Health insurance plans offered outside of an exchange, or off-exchange plans, had Silver plans that were not artificially inflated. But consumers in off-exchange plans had to shoulder the full brunt of the rate increases without any monthly subsidy Premium Tax Credit to lower their health insurance bill. The average increase for the Bronze plans according to the Covered California issue brief was 18%.
As the brief states, there is no comprehensive data regarding off-exchange enrollment numbers. Some reports speculate that 1.6 million people have left the individual and family plan marketplace for off-exchange plans. Covered California rightly asserts that, “For many consumers, double-digit premium increases could lead them to drop coverage.” They conclude the reasons for the decline in enrollment are due to premium increases, media coverage dissuaded people from seeking health insurance, and there was a lack of marketing and outreach. Covered California failed to recognize the increase in employer based health insurance has more people were employed and offered group insurance.
Immediate Congressional Action To Stabilize Marketplace
The most worrisome trend is that consumers leaving individual and family market place are those who are healthy and see little need for health insurance at such high premium rates. This leaves an existing pool of people with health challenges and who use utilize health insurance more. Beyond high rates, they see the elimination of the individual mandate, reduction in marketing, and the potential increased availability of short term medical plans as further eroding enrollment. The Covered California issue brief calls for immediate Congressional action to help stabilize the individual and family marketplace with specific policies.
- Restore 2019 marketing and outreach efforts to boost enrollment
- Reinstate health plan reinsurance program that has the potential to lower rates between 10% and 20%.
- Restore the Cost-Sharing Reduction subsidies for the enhanced Silver plans.
Covered California alludes to their support for additional state based policy actions to stabilize the market place.
- Implement a state-based individual mandate.
- Prohibit the health insurance options that do not provide comprehensive coverage or protect consumer with pre-existing conditions.
Short term medical policies are not comprehensive like the Qualified Health Plans offered through Covered California and they do not cover pre-existing conditions.
In their conclusion, Covered California notes that health plans have already begun their decision-making process for participation and rates for 2019. The decisions the health insurance companies make will be based on existing federal rules. If the rules and policies to stabilize the marketplace are not implemented in the next couple of months, consumers will most likely face premium increases of 12% to 32% in 2019.