Uncertainty about health insurance leading to higher costs for many

By Trudy Lieberman

What should you expect now that the drive to repeal and replace the Affordable Care Act appears dead — at least for the moment? Given how legislation gets made in Washington, I wouldn’t be surprised to see some elements of the repeal and replace bill surface again, possibly tacked onto what’s known as must-have legislation.

What’s more important to millions of families who must buy health insurance for next year is how much will it cost and what will it cover?

It’s safe to say that Obamacare will be around for a while, meaning that people without employer coverage, Medicare or Medicaid will have to buy their insurance through their state’s shopping exchange or choose a policy insurers may be selling in the individual market.

At the moment the state exchanges are fraught with uncertainty that will affect what your family will have to pay. Insurance companies are not sure whether the federal government will enforce Obamacare’s individual mandate.

Recall that the mandate requires nearly every American to carry insurance. It was a point of contention in last month’s congressional failure to repeal the health law.

Without the mandate, there’s no way to compel people to buy health insurance, and that means fewer people in an insurer’s pool to share the risk of insuring the sick who will be among those signing up for coverage. If the mandate is not enforced in the coming year, some insurers say they must price their policies high enough to cover the claims of people who need medical care.

Their other big worry is that the Trump administration will not continue the cost-sharing subsidies for people with low incomes who buy on the exchanges. The Affordable Care Act assumed that people with low incomes — 250 percent of the federal poverty level or less; that’s about $30,000 for a single person and $61,000 for a family of four — would need help paying the deductibles and other out of pocket costs. So it provided for a system of subsidies for people whose incomes qualified them and who purchased a silver plan in their state exchange.

This year some 58 percent of Americans buying on the exchanges received subsidies, which reduced their deductibles and other out-of-pocket costs by between $700 and $3,400. If the administration takes that help away, it’s a good bet those people won’t be able to buy insurance.

That’s exactly why the prospect of losing subsidies worries insurance companies as well as policy makers. It means the risk pool will shrink even more. That, in turn, will cause premiums to rise, perhaps more than they otherwise would.

Because of all this uncertainty, insurers are taking no chances and are pricing their 2018 policies to account for the possibility of no enforcement of the mandate and loss of cost-sharing subsidies for individuals and families.

In early August the Kaiser Family Foundation began to quantify what the uncertainty could mean for families buying in the state exchanges this fall. In 15 of the 20 states Kaiser looked at, insurers have proposed double-digit increases.

In Michigan, for example, Blue Cross Blue Shield of Michigan requested an average rate increase of 26.9 percent, while in New Mexico, New Mexico Health Connections asked for 32.8 percent.

While those proposed increases offer a flavor of what’s to come for policyholders in some states, it’s important to remember that few, if any, people pay average rates, and actual premiums for some people could be lower. Furthermore, insurance regulators often approve lower rates than the ones insurers ask for. Still, in some states, residents are likely to be paying more because of the uncertainty.

Keep in mind that paying a higher monthly premium isn’t the only way the uncertainty can hit your pocketbook. If an insurer chooses to charge lower premiums, most likely it will compensate by making you pay higher deductibles, coinsurance, and co-pays. For 2018 the maximum pay out-of-pocket amount is $14,700 for families and $7,350 for individuals, which includes spending for deductibles, co-pays, and coinsurance, but not the premium.

Paying those amounts is tough, so those buying on the state exchanges this year will have to carefully consider the trade-offs between paying higher premiums up front or more later if they get sick. It’s a choice that comes down to a family’s tolerance for risk.

What about the 156 million Americans with insurance from their employers? They’re not immune from higher cost-sharing either as their employers shift more of the burden of the growing cost of medical care to them. Using Kaiser data, Axios Vitals, a Washington health newsletter, estimated that deductibles for HMOs have increased 70 percent and for PPOs, preferred provider plans; they’ve gone up 41 percent from 2010 to 2016.

Just about everyone is feeling the pinch one way or another.

Trudy Lieberman, a journalist for more than 40 years, is a contributing editor to the Columbia Journalism Review, where she blogs about health care and retirement at cjr.org. She can be reached at trudy.lieberman@gmail.com. This column was distributed by The Rural Health News Service. Send comments to editorial@therepublic.com.