This column contains a correction.
To download the tables with the estimated premium increases attributable to ACA sabotage by congressional district, click here.**
Over the past two years, the Trump administration has worked tirelessly to sabotage the Affordable Care Act (ACA). The U.S. Congress’ repeal of the individual mandate penalty and the Trump administration’s actions to expand the availability of skimpy short-term plans are raising premiums for middle-class families. In its latest attack on the individual market for health insurance, the Trump administration also slashed funding for enrollment assistance by 72 percent and halted payments for risk adjustment, the federal program that discourages plans from avoiding sicker enrollees.
Last year, President Donald Trump’s decision to end cost-sharing assistance payments resulted in staggering increases in 2018 marketplace premiums, and these more recent attempts to destabilize the individual market will result in even higher rates for 2019. Although tax credits rise with premiums and therefore insulate lower-income individuals from higher costs, many middle-income families who buy insurance on their own will see 2019 premiums thousands of dollars higher than they would be if the Trump administration allowed the ACA to work as intended. Based on rate information to date, the Center for American Progress estimates that an unsubsidized 40-year-old will pay an extra $970 in marketplace premiums on average in 2019 because of the end of the mandate and the expansion of short-term plans.
Mandate repeal and short-term plans are driving up premiums
The individual mandate was one of the ACA’s mechanisms for keeping premiums low by stabilizing the insurance risk pool. Congressional Republicans’ tax bill—backed by the Trump administration—effectively eliminated the individual mandate starting in 2019. As a result, experts predict that young, healthy enrollees will tend to forgo health insurance, which leads to a sicker individual market risk pool and higher premiums for remaining enrollees. The nonpartisan Congressional Budget Office (CBO) has projected that mandate repeal will drive insurers to raise rates an additional 10 percent. What’s more, the Trump administration has made regulatory changes to widen the availability of short-term plans that offer substandard coverage, harming the ACA risk pool and raising rates for comprehensive coverage.
Rate filings to date show that many insurers are requesting large premium increases for 2019. The average requested rate increase was 30.2 percent in Maryland and 24 percent in New York state. Most insurers have specifically cited the repeal of the individual mandate in their actuarial memorandums. In New York, insurers attributed about half their large requested increases to mandate repeal. Even in states with small rate increases or overall decreases, insurer filings state that premiums next year would be significantly lower in the absence of federal sabotage. For example, BlueCross BlueShield of Vermont requested a relatively small 7.5 percent increase for 2019 but said that its request would have been 2.2 percentage points lower if not for mandate repeal. Peter V. Lee, the director of Covered California, said that his state’s average rate increase of 9 percent “could—and should—have been much lower.”
Estimating the cost of sabotage
CAP has projected 2019 premium increases at the congressional district level attributable to recent ACA sabotage. Like CAP’s earlier state-by-state estimates of premium increases due to ACA sabotage, these estimates are based on projections by the Urban Institute of 2019 premium increases due to the Trump administration’s decision to allow for short-term junk plans and Congress’ repeal of the individual mandate. The Urban Institute’s projections account for individual states’ efforts to stabilize the individual market through reinsurance programs, coverage mandates, and regulation of short-term plans.
Premiums vary widely not only across states but also across geographic areas within a state. Individuals in rating areas with fewer insurers and less competitive markets for physicians and hospitals—generally rural and lower-income areas—face higher premiums. To account for variation within a state, the authors used county-specific marketplace premiums from the Kaiser Family Foundation (KFF), then converted those estimates to congressional district averages.
Nationally, the authors estimate that recent ACA sabotage actions add an additional $970 to the 2019 annual benchmark premium for a 40-year-old.* Because premiums increase with age and household size, sabotage of the ACA hits older people and families even harder. A typical family of four will see a premium that is $3,110 higher and a 55-year-old couple will see a premium $3,330 higher on average because of President Trump’s recent efforts to undermine the ACA. While the ACA’s tax credits protect eligible enrollees from premium increases, unsubsidized middle-class consumers are responsible for covering the entire cost of these needless premium hikes.
The table downloadable below contains estimates for each congressional district’s excess 2019 benchmark premium dollars that enrollees would face. It includes examples of excess cost for three types of unsubsidized marketplace consumers: a single 40-year-old; family of four consisting of 38-year-old and 40-year-old parents and two children under age 15; and a 55-year-old couple.
Because underlying benchmark premiums vary both between and within states due to state policy decisions and local market conditions, the estimates of the cost of sabotage do as well. For example, within Maine, it’s expected a 40-year-old would face an extra $1,060 for marketplace coverage in 2019 in Portland but an extra $1,320 for coverage in the 2nd congressional district, which covers the northernmost region of the state. In California, a 40-year-old would pay an extra $1,170 in the 1st district, at the northern border; $1,040 in the 12th district, which covers San Francisco; and $720 in the 25th district, which includes parts of Los Angeles. In the two states that have enacted coverage mandates and banned short-term plans, New Jersey and Massachusetts, it’s estimated that the change in respective federal policies will not generate any excess premium costs.
CAP’s estimates capture the excess premium costs due to actions that Congress and the Trump administration took in late 2017 and early 2018. The total cost of ACA sabotage since Trump took office accounts for an even larger share of 2019 premiums. Marketplace rates in 2018—the starting point for the estimates—were already higher than they would have been under a good-faith implementation of the ACA because the administration slashed outreach efforts and stopped reimbursing issuers for cost-sharing assistance to low- and middle-income consumers.
Conclusion
Insurers’ rate filings for 2019 have made it clear that the administration’s backing of substandard coverage options and elimination of the individual mandate are driving up premiums for consumers. Further attacks on the marketplaces, such as the Trump administration’s threat to halt risk adjustment payments and slash funding for enrollment assistance programs could force insurers to raise rates yet higher. Whenever the Trump administration and congressional leaders sabotage the ACA and destabilize the individual insurance market for political show, middle-class enrollees are forced to pay the price.
Emily Gee is the health economist for Health Policy at the Center American Progress. Aditya Krishnaswamy is an intern for Health Policy at the Center.
*Authors’ note: The estimate of the national average excess premium paid by a 40-year-old consumer differs from CAP’s earlier estimate because the authors are using updated versions of actual and projected 2019 premium increases.
**Correction, July 24, 2018: The downloadable spreadsheet has been updated to remove extra rows of incorrect data and correct the average for Washington state in the table of state averages.
Methodology
The table shows the excess premium dollars individual market enrollees will be charged as a result of the Trump administration’s ACA sabotage. To account for local variation in marketplace premiums, CAP started with data from the Kaiser Family Foundation (KFF) on second-lowest cost silver benchmark premiums for a 40-year-old in 2018. The KFF premium data is at the county level, we developed a data crosswalk to convert counties to congressional districts using resources from KFF, supplemented with publicly available tables from Daily Kos to reflect the redrawn district lines in Pennsylvania.
We then used county population data from the 2016 American Community Survey (ACS) via American FactFinder to calculate population-weighted average 2018 benchmark premiums in each district. We then used the 2018 benchmarks to estimate 2019 premiums and the portion of the 2019 premium attributable to mandate repeal and the short-term plan rule.
In most states, little or no information on 2019 average rate increases was available to date. In those cases, we took our 2018 average benchmark premiums and trended them forward to a 2019 baseline by applying the 7 percent national medical trend projected by Covered California, giving us an estimate of what 2019 premiums would be if the Trump administration had not engaged in any ACA sabotage since fall 2017. Next, we applied the Urban Institute’s projections of 2019 premium increases attributable to the repeal of the individual mandate penalty and the proposed short-term plan rule in each state, and then converted that to a dollar amount for each district.
For two states, we adjusted the Urban Institute’s projection of excess premiums to reflect recent state action to stabilize the market for comprehensive insurance; therefore, the estimates in this column may differ from those in a previous CAP column. New Jersey and the District of Columbia, have passed state-level mandate legislation, and we altered the projected 2019 premium increase for these states. We reduced the District of Columbia’s projected excess premium increase educed by 10 percentage points to eliminate the effect of federal mandate repeal. New Jersey, as Massachusetts, has both a state mandate and a ban on short-term plans, so our estimate of excess premium dollars from the federal changes is $0. We did not alter the Urban Institute’s projection for Vermont, where the state mandate does not take effect until in 2020.
In the handful of states where officials have announced the average requested rate increase in 2019—California, Connecticut, Colorado, Florida, Indiana, Michigan, Nevada, New York, Ohio, Pennsylvania, and Washington state—we incorporated that statistic into our calculations. In these cases, we applied the statewide average increase to each district’s benchmark to approximate 2019 premiums, including the effect of sabotage. We then solved for the amount of the amount attributable to the mandate and the short-term plan rule by assuming that the 2019 premium included a load equivalent to the Urban Institute projections. In some states, issuers requested a small rate increase or a decrease for reasons including setting 2018 prices to high or accounting for a new state reinsurance program. Regardless of the size and direction of the 2010-19 rate increase, the level of 2019 rates would be lower without changes to the mandate or short-term plans; therefore, we still estimate a positive cost of sabotage because without destabilizing policies.