What’s trending in health insurance?
2018 has been a busy year in the health insurance industry. The federal government implemented a new rule, making the formation of association health plans simpler and possibly more affordable. According to a KFF poll, 7 out of 10 voters considered healthcare to be the most important issue on their minds as they went into midterm elections.
Three states passed ballot measures to allow for Medicaid expansion, and in two other states, governorship flipped to candidates who promised to implement the expansion provisions.
At the national average, premiums for the benchmark program – the midlevel plan offered by companies through the Affordable Care Act – will be going down slightly (1.3%). Plans available on the individual markets will increase around 3% on average. These averages, however, are fairly useless when looking at individuals; some states are seeing double digit increases of premiums, while others are seeing double digit decreases.
Overall, Americans are more concerned about their healthcare and health insurance. That concern has continued to increase. Hopefully we have seen a leveling out of insurance plan premiums; the past two years have seen double digit increases (30% in 2016 and 25% in 2017).
Association health plans: will they make a difference?
This year, new rules were rolled out that were designed to make association health plans, or AHPs, available to more people. These plans are available to solo business owners (those who have no employees) or very small businesses (with 10 or fewer employees). But they also make it easier for various groups to band together and buy insurance as a group, reducing the risk and lowering premiums. People will also be able to buy family coverage through these plans.
The goal of AHPs is to shift the smallest business owners out of the Affordable Care Act plans and into the individual market. Over time, projects suggest that more than 3 million people could shift out of the ACA individual market and into AHPs. Those considering AHPs, however, should be careful. Since these plans are not covered by the ACA regulations, they are not subject to minimum covered services or pre-existing condition rules.
What’s going on with pre-existing conditions?
A key provision of the Affordable Care Act law was that insurance companies could not refuse coverage or charge higher rates based on someone’s pre-existing conditions. While this rule has been challenged repeatedly, it has not yet been repealed – in part due to its popularity with most Americans throughout several elections.
A lawsuit threatening the pre-existing conditions rule, however, is making its way through federal courts. The suit proposes that since the individual coverage mandate – the rule saying that everyone must have health insurance – has now been struck down, the entirety of Obamacare is now unconstitutional. The Department of Justice has stated that it will not defend the Affordable Care Act; President Trump campaigned on a platform of repealing the law – even though he spoke as recently as October, saying that he supported pre-existing conditions rules.
If the pre-existing conditions rules are struck down, it’s very possible that Americans could see a return to the days when 27% of Americans were unable to buy insurance because of pre-existing conditions, and insurance companies would be able to raise premiums at will for this population. Some states have enacted pre-existing condition provisions at the state level; with many state governments flipping blue and the Democrats regaining control of the House, the number of states doing this might increase – which means that where Americans live will have a significant effect on whether or not they are able to get health insurance at an affordable rate.
Without the tax penalty, are people likely to drop coverage?
Although the Congressional Budget Office has suggested that between 3 to 6 million people may drop out of the insurance marketplace without the tax mandate, they have also stated that their analysis is inherently difficult to measure. It assumes that the tax mandate is the only reason that someone was purchasing health insurance. There’s no way to tell if customers have found that having insurance is better than not having it, or if they’ll simply avoid dropping it because keeping it is easier.
If a significant number of individuals do drop out of the insurance market, this will have a seriously negative effect on the marketplace in general. Those who drop out are likely healthy people who don’t see themselves as needing health insurance. When insurance companies are only covering sicker individuals, premiums will rise, pricing more and more people out of the market.
Expect health insurance to be on everyone’s minds in 2019. With Democrats controlling the House, a repeal of the ACA is virtually impossible. Expect the outcome of the pre-existing conditions lawsuit to heavily influence what happens next, but also know that it’s a virtual certainty that the losing side will appeal, potentially up to the Supreme Court. That means that the pre-existing condition rule probably won’t change in 2019 – but may remain in danger in the future, despite its popularity.