Last year, as part of the recently passed tax law, Congress repealed the Affordable Care Act’s (ACA) individual mandate penalty, despite estimates from the nonpartisan Congressional Budget Office that this would increase average individual market premiums by 10 percent. The individual mandate fined people who chose to remain uninsured in order to encourage younger and healthier people to purchase health coverage. This resulted in a healthier insurance pool, lowering premiums for everyone.
In recent weeks, state have begun to hit their deadlines for insurers to file their proposed individual market premium rates. The emerging trend from these rate filings is clear: Congress’ repeal of the mandate penalty is significantly driving up premiums.
In many states thus far, insurer rate filings have explicitly pointed to Congress’ actions as a major driver of premium increases.
Maine
Proposed average rate hikes in Maine for 2019 range from 9.2 percent to 13.8 percent. To help moderate these increases, the state is hoping to revive a reinsurance program that was in operation several years ago. If this reinsurance program is reinstated for 2019, average rate changes would range from an 8.7 percent decrease to a 6.9 percent increase—a substantial decline.
Some Maine insurers, including Harvard Pilgrim and Community Health Options, cited the individual mandate penalty repeal as a major factor contributing to rate increases. Community Health Options also cited the Trump administration’s proposed rules on short-term limited-duration plans and association health plans as factors that would disrupt the market.
Maryland
Proposed rate hikes in Maryland for 2019 average 30.2 percent and range from 18.5 percent to 91.4 percent. Both of the insurers on Maryland’s marketplace, CareFirst BlueCross BlueShield and Kaiser Permanente, cited the individual mandate penalty repeal as a factor driving up premiums. For example, Kaiser’s rate filing noted that, “The elimination of the Individual Mandate is expected to have a significant impact.”
In addition, the state has proposed a reinsurance program that would help alleviate these increases if approved by the Trump administration. CareFirst’s president and CEO said that the reinsurance program could reduce CareFirst premium increases by 20 percent to 30 percent and stated that, “There’s been a series of actions taken by the current administration that have undermined enrollment.”
New York
Proposed rate hikes in New York for 2019 average 24 percent. The state’s Department of Financial Services noted that the repeal of the individual mandate penalty was “the single biggest justification offered by insurers for the requested increases.”
Notably, the state asked insurers to quantify how much lower their premium increases would be if Congress had not repealed the individual mandate penalty. These data demonstrate that without the mandate penalty repeal, the proposed rate increases would have averaged 12.1 percent. As state officials explained, “Insurers have attributed approximately half of their requested rate increases to the risks they see resulting from its repeal.”
The insurer with the largest proposed increase, Fidelis Care, noted that if Congress had not repealed the individual mandate penalty, it would have requested a 12.7 percent increase instead of its actual 38.6 percent proposed increase—meaning that Congress’ actions tripled the proposed premium increase for this insurer.
Oregon
Proposed average rate hikes for six of Oregon’s seven insurers for 2019 range from 5 percent to 16.3 percent, with the seventh insurer actually proposing a decrease of 9.6 percent. Several insurers, including PacificSource Health Plans, BridgeSpan Health Company, Health Net Health Plan of Oregon, Moda Health Plan, Providence Health Plan, and Regence BlueCross BlueShield of Oregon, cited the repeal of the individual mandate penalty as a factor driving rates upward.
PacificSource noted that, “The ACA market has had sufficient time to stabilize … however we project that market morbidity will worsen due to the removal of the individual mandate.” Although PacificSource is the insurer that proposed a rate decrease, this indicates that the decrease could have been even larger were it not for the repeal of the mandate penalty.
Pennsylvania
Proposed rate hikes in Pennsylvania for 2019 average just 4.9 percent, less than in most other states. According to Pennsylvania officials, this lower increase reflects the state’s conscious efforts to counteract federal attempts to undermine the market—efforts including a state enrollment outreach campaign and actions to mitigate the Trump administration’s cancellation of cost-sharing payments.
As the state’s Insurance Department writes:
The individual and small group insurance markets have been subject to intense and deliberate sabotage by the federal government in the past year, including: the elimination of cost-sharing reductions, shortening of the open enrollment period, slashed federal funding for outreach to consumers, the elimination of the individual mandate, and the continual threat of the repeal of the ACA, which has created instability and uncertainty for insurers and consumers.
Rhode Island
Proposed average rate hikes in Rhode Island for 2019 ranged from 8.7 percent to 10.7 percent. One of Rhode Island’s two marketplace insurers, Neighborhood Health Plan of Rhode Island, specifically cited the repeal of the individual mandate penalty as a factor driving up premiums.
Vermont
Proposed average rate hikes in Vermont for 2019 range from 7.5 percent to 10.9 percent. Due to actions that the state has taken to mitigate the Trump administration’s cancellation of cost-sharing payments, however, the effective average premium increases are expected to range from 5.3 percent to 6.4 percent.
Both of Vermont’s marketplace insurers, MVP Health and Blue Cross Blue Shield of Vermont, cited the repeal of the individual mandate penalty as an important factor contributing to these premium increases. MVP Health estimated that its premium increases would have been 2 percentage points lower—or 5.5 percent—without this repeal, while Blue Cross Blue Shield of Vermont estimated that its premium increases would have been 2.2 percentage points lower—or 8.9 percent.
Virginia
Proposed average rate changes in Virginia for 2019 range from a 1.9 percent decrease to a 64.3 percent increase. Several Virginia insurers, including Cigna, CareFirst BlueCross BlueShield, and Kaiser Foundation Health Plan, specifically cited the repeal of the individual mandate penalty as a factor in their rate increases. For example, Cigna wrote that “the risk pool is significantly impacted” by the repeal of the individual mandate penalty and the Trump administration’s proposed rules on short-term limited-duration plans and association health plans.
Washington
Proposed rate hikes in Washington for 2019 average 19 percent. Washington Insurance Commissioner Mike Kreidler cited uncertainty generated by “the Trump administration’s efforts to undermine the Affordable Care Act” as a key factor behind these increases.
Several of the state’s insurers, including Kaiser Foundation Health Plan of the Northwest, Kaiser Foundation Health Plan of Washington, Molina Healthcare of Washington, and Coordinated Care Corp., cited the repeal of the individual mandate penalty as a major driver of their proposed rate hikes.
Conclusion
The direct link between Congress’ repeal of the individual mandate penalty and these individual market rate hikes is not a matter of conjecture: Insurers and state officials are stating it plainly. The rate filings from these states make clear that sabotage from the Trump administration and Congress is undermining the market and raising costs for consumers.
Thomas Huelskoetter is the policy analyst of Health Policy at the Center for American Progress. Madeline Twomey is the special assistant for Health Policy at the Center.
Author’s note: Throughout the column, using provided links to the main search pages, the authors searched individually for indicated filings and specific insurance company information and quotes.