Obamacare premiums could spike 35-90% over the next three years

Covered California released a report today warning that Obamacare premiums could spike from 35% to 90% over the next three years. From the introduction to the report:

Recent health care actions taken by Congress and the federal administration — elimination of the insurance mandate penalty, proposing greater flexibility to allow for association and short-term, limited-duration plans — are expected to draw consumers out of the individual market, sowing market instability and raising the specter of large premium increases in 2019 and beyond…

The effects of these policies will vary by state. However, absent federal policies to stabilize the individual marketplace, a previous Covered California report found the statewide average premium increases in 2019 could range from 12 to 32 percent — with some carriers in certain states having even higher rate increases, depending on state factors…

This updated analysis indicates that statewide average premium increases could range from 12 to 32 percent in 2019, with additional increases of 10 to 21 percent expected in both 2020 and 2021 (see Table 1: Projections of Individual Market Premium Changes Nationally in 2019, 2020 and 2021). Cumulatively, these premium increases would average 50 percent over the three-year period, with a projected range of 36 percent to 94 percent.

Here’s a chart included with the report:

As you can see, there is a lot of uncertainty here but nearly all of the increase comes from those top two rows, i.e. inflation and repeal of the individual mandate. The report is saying that those two things alone will result in double-digit increases over the next three years. The report goes on to break this up into three categories by states. Those that have a chance of “catastrophic” (90%) cumulative increases over three years are red. Those with a chance of high (50%) cumulative increases are orange and the lowest tier (35%) are yellow:

The first thing to note here is that Covered California is not some right-wing group looking to trash Obamacare. It’s the group that runs California’s exchange and is as reliably pro-Obamacare as can be. True, the report does blame much of this on the Trump administration, but the projections themselves definitely seem like bad news for the law.

Second, this is obviously bad news for anyone who is actually paying for their own Obamacare insurance. A percentage of people who sign up for the plans (including most who sign up on healthcare.gov) aren’t paying those increased costs. Those folks will continue to get a mostly free ride. But for people who make over 400% of the federal poverty line, these hikes are going to be brutal. If the projections are accurate, Obamacare will slip further into being a kind of semi-free Medicaid program.

One of the states that has been trying to do something about increasing premiums is Idaho. Idaho had planned to allow insurers in the state to sell cheaper plans that did not comply with all of Obamacare’s coverage requirements. Today, HHS informed the state that it would not be allowed to do so. From Politico:

“CMS is committed to working with states to give them as much flexibility as permissible under the law to provide their citizens the best possible access to healthcare. However, the Affordable Care Act remains the law,” read a statement from CMS, which oversees the law’s insurance marketplaces.

Under Obamacare, states are the primary enforcers of the law’s private insurance rules, but the federal government is required to step in if a state chooses to not do so.

Several legal experts contended that the Idaho proposal, announced earlier this year, was a clear violation of Obamacare.

The same letter from CMS went on to encourage the state to modify its proposal to be in line with an expansion of short-term health plans which has been proposed by the Trump administration.