Semro column: Good news, and bad news
When it comes to the cost of health insurance there’s good news and bad news.
Historically, the largest premium increases for health insurance have been in the individual market, where coverage is purchased directly by an individual or family rather than through an employer.
Coloradans can buy this insurance directly from the carrier or through the state insurance exchange, Connect for Health Colorado. About 8 percent of Coloradans (over 370,000 people) get their insurance through the individual market. And, people living in rural West Slope counties are more likely to be in the individual market than other parts of the state.
In 2018, premiums for individual health insurance plans in Colorado increased by an average of 32 percent. That average included all insurance companies, all plans, in all areas of the state for all age groups.
By comparison, the average rate increase for individual plans in 2019 is 5.6 percent. That’s much closer to historical premium growth and represents the smallest average increase since 2015.
Additionally, each Colorado county will have at least one insurance carrier. Seven insurance companies will offer individual plans on Connect for Health Colorado and the number of plan offerings will be similar to last year.
Relatively speaking, all of this is good news, at least compared to previous years. The bad news is that it could have been a whole lot better, if not for the determined political effort to dismantle our existing health-care laws.
In 2017, Congress tried again and again to repeal all or parts of the Affordable Care Act (ACA). In the tax cut bill, Republicans were finally successful in repealing the individual mandate which required people who can afford insurance to purchase coverage or pay a tax penalty.
In 2018, the Trump Administration ended the ACA’s cost-sharing subsidies and introduced short-term and limited benefit plans that offer minimal coverage while allowing insurance companies to deny benefits for pre-existing conditions.
All of this has had the effect of draining healthy Americans out of the individual market while increasing premiums for older and less healthy people in that risk pool. And that drove up costs for all concerned.
A July 2018 study published by the nonpartisan Kaiser Family Foundation found that, in many parts of the country, insurance premiums in 2018 were “overpriced.” They were overpriced because some insurance companies jacked up premiums that year when they expected that the ACA and individual mandate would be repealed.
According to that study, many individual market premium hikes in 2018 (perhaps including the 32 percent increase in Colorado) were in part a response to the market uncertainty created by those repeal attempts.
According to a national study published by Kaiser this October, 2019 premiums for benchmark silver-tier plans in the individual insurance market will cost 16 percent more than they would have, if the ACA had been left alone. According to Kaiser, the combined effects of ending cost-sharing reduction payments, repealing the individual mandate and the expansion of “loosely-regulated plans” promoted by the Trump administration caused that increase.
In terms of actual costs, this political strategy will increase premiums for a 40-year-old silver-tier policy holder from $427 to $495 a month. That’s an additional $816 a year.
The study also found that premiums for non-silver ACA compliant plans (sold on or off of the exchange) will cost 6 percent more in 2019 than they could have. That’s an average premium hike of about $317 per year.
For people who receive subsidies, those premium increases will have little impact since subsidies will be increased to cover the rate hike. Thanks to Congress and the Administration, those additional costs will be passed on to taxpayers.
Bottom line, turning health-care reform into a political dog bone contributed to major premium hikes in 2018 that were avoidable, and instead of seeing premium decreases next year we’ll see increases.
Worse yet, this political strategy has caused 3 million Americans to lose health insurance coverage either voluntarily or involuntarily, since January of 2017. And if the Trump Administration-backed lawsuit to declare the ACA unconstitutional succeeds, more than 15 million Americans will lose their coverage or face rate hikes due to pre-existing conditions, gender or age.
Ironically, the single biggest driver of premium costs – the ever increasing cost of health care itself, is something neither party in Congress wants to touch with a stick. Medical price inflation and higher prescription drug prices continue to grow just like they have every previous year. Projected medical trend costs in 2019 are expected to grow by about 5 to 8 percent, the same rate as they did this year. That’s almost twice the average growth rate of the economy in 2018. And according to most experts the U.S. economy’s doing pretty well.
Perhaps that’s what our elected representatives should be focusing on instead of endless and self-destructive political food fights.
Bob Semro of Glenwood Springs is a former health policy analyst for the Bell Policy Center, and a legislative and senior advocate.