ACA: Health Insurance Prices Go Down, Availability Goes Up for 2020

Last week information from the Centers on Medicare and Medicaid Services (CMS) in HHS indicated that health insurance premiums for 2020 would decrease by an average of 4 percent. At the same time, just 12 percent of ACA customers will be living in counties that will only have one insurer providing coverage. Additionally, 20 more issuers will participate in states that use the Federal Health Insurance Exchange platform in 2020, bringing the total to 175 issuers compared to 132 in 2018.

All characteristics represent a significant improvement in both the costs and availability of health insurance provided through the Affordable Care Act. The figures are based on health insurance policies being made available to the 39 states that utilize the federal ACA website as their state exchange to provide health insurance under the 2010 health law. By comparison, in 2018, 30 percent of people lived in counties with only one health insurance company providing policies. Average premiums will decrease in 27 of the 39 states covered. Premiums for a silver plan (third level plan) for a single 40-year-old went up by 32 percent between 2017 and 2018.

Six states experienced double-digit percentage declines in average silver plan premiums including, Delaware (20%), Nebraska (15%), North Dakota (15 %), Montana (14%), Oklahoma (14%), and Utah (10%). The figures are based on the most common type of health insurance policy purchased, the third-highest benefit package (silver option), and comparing what a 27-year-old single person would pay and what a family of four would pay.

The changes come despite the efforts of the Trump Administration to undercut the ACA by restricting the enrollment period and cutting back on efforts to promote the enrollment period near the end of the annual enrollment period. Thirty-nine states opt to use the federal website to allow their state residents to buy a policy with the other 11 states and District of Columbia using their web-based site to sell policies. Some states such as New Jersey, Colorado, and Delaware have been using the new law to provide reinsurance structures with the government covering the catastrophic costs while private insurance covers costs up to the catastrophic level. As a result, the states of Colorado and Delaware are expected to see premiums decrease by 20 percent and 19 percent next year. Another factor is that more insurance companies are opting into selling policies on the exchanges. This is likely the result of the fact that the ACA is staying in place after the Trump Administrations failed repeal efforts in 2017 and 2018.

Rates increased, according to some analysists, in part because insurance companies tried to anticipate some of the negative actions by the Trump Administration: repealing the mandate to buy insurance, ending some of the cost-sharing by the federal government, and attempts by the President to allow cheap policies into the exchange that would not be required to provide minimum insurance coverage.

Ultimately one of the theories of the ACA is that all policies providing the same set of insurance packages to choose from, sold on the same exchange, to people who can purchase policies either with or without federal tax subsidies based on income will create competition between insurers putting downward pressure on premiums. That seems to be working, at least for this year, despite the President’s attempts to, at first repeal the ACA, and when that failed, to undercut the ACA.

About the Author:

John Sciamanna is CWLA's Vice President of Public Policy.

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