President Donald Trump has crowed about dismantling the Affordable Care Act, even as he has failed to repeal it. But his efforts on health care, so far, are likely to hurt people who aren’t even covered by the ACA.
One group of health-care consumers have had a rough go during the last several years: The 6.7 million Americans who aren’t covered by an employer, who buy insurance on the individual market and who earn too much money to qualify for subsidies under the ACA. These folks tend to be self-employed or work as independent contractors, and insurance premiums for a husband and wife can top $20,000 or even $30,000 a year. Those between 55 and 64 tend to pay the most. (Medicare kicks in once people turn 65.)
Trump wants to help people trim their health-insurance bill, and he has introduced several measures that will help — but only for people who don’t get hurt or sick. People who have pre-existing conditions, or want a comprehensive policy, won’t enjoy any savings. And those who don’t have a big company negotiating insurance premiums on their behalf could see double-digit premium increases in 2019. Again.
“There’s going to be an enormous range of premium increases for 2019,” Larry Levitt of the nonprofit Kaiser Family Foundation tells Yahoo Finance. “Insurers are pointing toward actions by Congress and the Trump administration that will undermine the market and increase premiums. Bearing the brunt will be middle-class people who buy individual policies and don’t get subsidies under the ACA.”
How Trump has altered the ACA
Trump and his fellow Republicans have taken three steps that will change the dynamics of the ACA in 2019. First, the tax legislation Trump signed at the end of 2017 repealed the individual mandate requiring most Americans to have health insurance, beginning next year. So people who feel comfortable going without insurance won’t have to pay for it. But they’ll have to pay out of pocket if they need any kind of treatment or medication.
Second, Trump wants to allow consumers to purchase “association” or “skinny” health insurance plans that don’t have to comply with ACA rules. And third, Trump wants to let consumers buy “temporary” health insurance plans that last for as long as 12 months, which means people could buy a new one every year as their principle source of insurance. The ACA allowed just three-month temporary plans, which made them impractical as long-term insurance. The idea then was to provide bridge insurance for people in transitionary periods, such as moving from one job to another. But now, people will be able to use temporary plans in lieu of traditional insurance.
Opting for one of the new plans will typically be cheaper — but they’ll cover far less. For starters, temporary and skinny plans generally don’t cover pre-existing conditions. They also offer limited or no coverage for things such as maternity care, substance abuse and mental health treatment. Some of these plans also put a cap on the amount they’ll pay out, so they don’t really cover catastrophic care. “These plans cover a few illnesses, but they’re not really insurance,” says Sara Collins of the Commonwealth Fund. “People don’t always know what they’re getting.”
The Health and Human Services Department estimates that 1.4 million people could sign up for these new plans in 2019. But the only people likely to opt for such plans are healthy people who don’t anticipate needing much care. That will leave sicker, costlier patients in the traditional insurance pool, where policies must cover pre-existing conditions and a wide range of services. When costs rise, premiums must rise to cover them.
Little relief from soaring premiums
Bill Luffman, 61, is a tobacco consultant in State Road, North Carolina, whose premiums have soared since the ACA went into effect. But he doubts the Trump proposals will help him. The premium on a Blue Cross/Blue Shield policy covering him and his wife, Joan, rose from $689 a month in 2015 to $2,347 per month in 2017. He paid. But when Blue Cross hiked it to near $2,500 per month for 2018, he applied for a federal waiver letting him buy a cheap policy with limited coverage, because the cost of health insurance was well over 25% of his income. He got the waiver and now pays $1,350 for a policy that covers catastrophic care, but little else.
Luffman rides motorcycles, and doesn’t want a policy that could expose him to open-ended medical costs. So he won’t go without insurance or buy a plan with a low payout cap. And he doesn’t trust Blue Cross, the only insurer in the area, to offer a better-value plan if it can force people into expensive plans. “I think what Blue Cross will do is parlay this into an all-or-nothing situation,” he says. “Without a mandate, they could say, ‘there’s no mandate, either go uninsured or pay us four grand a month.’ Everything about it just really makes me angry.” He hopes to stick with his catastrophic plan — assuming it remains available — until he turns 65 and qualifies for Medicare.
Only a few insurers have so far proposed rate changes for individual plans for 2019. In Oregon, at least three insurers are planning to roll back rates, with six others proposing increases ranging from 9% to 16%. In Maryland, Vermont and Virginia, insurers have proposed rate hikes ranging from 8% to 91%. Those are only proposals, and state officials typically negotiate rate hikes lower. Still, double-digit premium increases seem likely in at least some areas.
ACA enrollees who qualify for subsidies are protected from rate hikes, to some extent, because there’s a cap on premiums, as a percentage of income, that they’re required to pay. Above the cap, the government covers the rest. But subsidies phase out completely for couples with an income of about $64,000, and for a family of four at around $97,000. Households with incomes above that level must pay full freight. And since buyers in the individual market have little bargaining power, insurers tend to hit them with the biggest cost increases.
There are ways to fix the disproportionately high cost of insurance for unsubsidized middle-class consumers in the individual market. Congress could raise the income limits for subsidies under the ACA. It could reestablish cost-sharing payments to insurers that Trump abrogated last year. It could also reinstate a “reinsurance” program for the ACA that was temporarily in effect from 2014 through 2016 and did help stabilize some premiums. “It’s a very fixable problem,” says Collins of the Commonwealth Fund. Except, apparently, now.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman