Open Enrollment Report: Government Paying More for ACA Plans

Expect the current trend to continue if proposed changes come to fruition.

About 11.8 million people signed up for health insurance on Affordable Care Act (ACA) exchanges during last fall’s open enrollment period, according to a final report released Tuesday by the Centers for Medicare and Medicaid Services (CMS).

The number came close to last year’s 12.2 million sign-ups, despite concerns that a reduction in resources and confusion over the ACA’s future could dampen enrollment.

Perhaps the most interesting numbers in the final report, however, were the ones indicating who paid how much for these plans. Although the average subsidized premium paid by consumers fell, the cost to the government rose.

The average premium for an exchange plan rose 30% from $476 in 2017 to $621 in 2018, according to the report. But the majority of consumers, about 83%, had their premium costs offset by tax credits.

Those average tax credits rose dramatically from $383 last year to $550 this year, driven at least partially by the Trump administration’s decision last fall to halt cost-sharing reduction (CSR) payments.

Doing the math

Among consumers who receive tax credits, the average premium is $639 for 2018, and the average tax credit is $550, leaving an average subsidized premium of $89 per month to be paid by the consumer, according to the report. That’s down 16%, from the $106 average subsidized premium last year.

The nearly 1.3 million consumers who don’t receive tax credits have an average premium of $522 per month.

“Taken together these data suggest that more affordable healthcare options are needed. Especially for those forgotten women and men who are not eligible to have their premiums reduced by tax credits,” said CMS Administrator Seema Verma in a statement.

More to come

Verma touted a rule recently proposed by CMS to ease restrictions on short-term, limited-duration  (STLD) insurance as an alternative for those who can’t afford their premiums. The administration has also proposed increasing access to association health plans (AHP).

Both STLD and AHP coverage options—which are exempt from some of the ACA’s requirements—are expected to entice healthier consumers away from exchange plans, leaving sicker consumers behind and ultimately resulting in even higher premiums for ACA-compliant plans.

So, if the Trump administration follows through on the plans it has proposed, the trend exhibited in the open enrollment final report will likely continue.