Brace yourselves -- it looks like Obamacare premiums could jump by double digits again next year.
Insurers in several states have requested large rate hikes for 2019, with many pointing to steps taken by President Donald Trump and Republicans in Congress as the main reasons why.
New York insurers want to hike rates by 24%, on average, while carriers in Washington are looking for a 19% average premium increase. In Maryland, CareFirst is asking for an average 18.5% rate bump for its HMO plans and a 91% spike for its PPO policies (which have far fewer enrollees), while Kaiser Permanente wants to boost premiums by more than 37%, on average.
Many insurers cite two key drivers of the increases: Congress' elimination of the penalty for the individual mandate -- which requires nearly all Americans to have coverage or pay up -- and the Trump administration's expected expansion of two types of health plans that don't have to adhere to Obamacare's regulations.
"Health insurance providers are now making decisions about market participation and pricing for the 2019 plan year in a market that continues to face uncertainty and instability challenges," America's Health Insurance Plans, an industry group, wrote in a recent report.
Jettisoning the individual mandate penalty is expected to cause premiums to rise by about 10%, the industry group said, citing reports by the Congressional Budget Office and independent actuaries. That's because younger and healthier people will be more likely to forgo insurance since they will no longer have to pay a penalty. Insurers fear they will then be left with sicker and older policyholders, prompting them to request higher rates to cover the anticipated increase in claims.
Also, Trump last year issued an executive order directing federal agencies to make it easier to buy two alternatives to Obamacare plans. One would allow small businesses to band together to buy coverage through association health plans, while the other would let Americans buy short-term coverage that would last less than a year, rather than the current 90-day limit. Both of these types of policies are expected to have lower premiums, but would cover fewer benefits -- making them more attractive to healthier Americans who don't need comprehensive coverage.
Insurers in remaining states will file proposed rates in coming weeks. Regulators will review the requests and could change them significantly. Premiums will be finalized in September and open enrollment starts November 1.
There are some bright spots in the 2019 Obamacare landscape. Insurers in some states, such as Pennsylvania and Vermont, have requested relatively modest increases. In the Keystone State, insurers are asking for a boost of 4.9% on average. Meanwhile, BlueCross BlueShield of Vermont and MVP Health Care are asking for 7.5% and 10.9% bumps, respectively.
Pennsylvania Insurance Commissioner Jessica Altman attributed the relatively small increase to the state's efforts to maintain enrollment this year after the Trump administration slashed support. Also, the state's individual market remains competitive: Nearly half of counties will have a greater choice of insurers next year, and only eight will have just one carrier, down from 20 this year.
Another plus: Insurers so far haven't pulled out completely from any market in the nation. At various points last year, tens of thousands of Americans in dozens of counties were facing the prospect of having no choice of carriers on their Obamacare exchanges. State regulators, however, were able to convince insurers to offer policies in every county by the time open enrollment began in November.
Also, most Obamacare enrollees won't have to pay more for coverage next year, regardless of how much insurers hike premiums. That's because they receive federal subsidies that limit their rates to less than 10% of their income.
However, the rate hikes will hit the millions of Americans who earn too much for subsidies or who buy individual coverage outside of the Obamacare exchanges.