After two years of higher premiums and fleeing insurers, the federal marketplace seems to be correcting.
Good news for insurance consumers shopping for ACA plans as premiums for benchmark, or Silver Plans--the most popular plan level, have decreased by 1.5% nationally. The report comes from federal statistics released from HealthCare.gov, encompassing the 39 states that participate in the federal program. This marks the first time premiums in the federal marketplace have decreased since the inception of the ACA.
ACA Insurers Increasing
Along with the premium decrease, the federal marketplace is seeing an increase of insurers. In 2018, there were 10 states with only one insurer. In 2019, that number dwindles to 4. The increased competition is likely to push down premiums.
In 2019, 20 insurers will newly enter the marketplace while 29 will expand their coverage area--including Oscar Health, Centene, Cigna, Wellmark, Anthem and Medica. Insurers claim the marketplace is stabilizing as existing participants become profitable and understand how to handle the complexities of the ACA.
Why Rates Went Down
Most policy experts claim 2019’s decrease in premiums was a correction from the first two years of the Trump Administration, as Trump eliminated the ACA mandate that required many younger, healthy people to enter the marketplace to keep the program solvent. President Trump also ended a ACA subsidy to help low-income customers with deductible expenses. Lastly, premiums have been on the rise the previous few years because insurers were dropping out. Between 2016 and 2017, 30% of insurers dropped out. In response to these three developments, premiums went up 37% between 2017 to 2018.
However, the Trump Administration points to its success in cutting the enrollment period in half, which prevents premium hoppers, as well as its bolstering of state reinsurance programs. The Administration’s introduction of short term or "skinny plans" have yet to show their effect on premiums.
Overall, Insurers seem to feel more confident in the program’s viability, as it has withstood several rocky enrollment periods and turbulent political cycles.
Who Benefits From Lower ACA Premiums?
Middle class insurance customer, about 1 in 5 ACA policyholders, will greatly benefit from the reduction of premiums, as they cannot qualify for the various subsidies within the ACA. The effects of the lower premiums reach beyond policyholders. Taxpayers will get relief, as lower premiums mean lower subsidies for low-income customers. About 8 in 10 customers in the federal marketplace receive federal subsidies.