The ACA stability "crisis" in perspective
The big questions about the stability of the Affordable Care Act marketplaces have focused on how fast premiums will rise, and how many plans will participate. But an equally important question, and the heart of the matter politically, is: How many people will be affected by the sharp premium increases?
The bottom line: The answer is about 6.7 million Americans who buy coverage in the non-group market in and out of the exchanges, and do not receive premium subsidies. That is a significant number of people, and an urgent policy problem requiring congressional attention and action by the administration, but it's not a system-wide health insurance crisis. The non-group market has always been the most troubled part of the insurance system, and it was far worse before the ACA.
- 17.5 million in the non-group insurance market, including:
- 10.3 million enrolled in the ACA exchanges
- Approximately 7.2 million buying insurance off the exchanges
- Most of this group buys ACA-compliant plans
- About 1.2 million in "grandfathered" plans purchased before the ACA's market reforms took effect
Yes, 17.5 million is a sizeable number, and what happens to their health insurance coverage and costs is important. But, to put it in perspective:
- 156 million get their primary coverage through an employer, where premiums rose a modest 3% last year for family coverage
- More than 74 million are covered by Medicaid and CHIP.
According to our new analysis of proposed 2018 premium changes in the exchanges, double-digit increases for benchmark silver plans are quite common, though the range across major cities is large, from a 5% decrease in Providence, R.I. to a 49% increase in Wilmington, Del.
A big reason for these increases is the uncertainty in the market surrounding Trump administration policies, especially whether they will let the $7 billion in cost-sharing reduction (CSR) subsidies flow and whether the individual mandate will be enforced.
Who's getting hit: 84% of the enrollees in the marketplaces – about 8.7 million people – receive premium subsidies under the ACA and are insulated from these premium hikes.
However, roughly 6.7 million people — the ones who buy ACA-compliant plans inside or outside the marketplace and aren't subsidized — will feel the full brunt of premium increases. They'll be hit if the uncertainty is not resolved and the rates do not come down before they are finalized.
In many cases, there is as much as a 20 percentage point swing or more in rates depending on whether the CSRs are paid.
The big picture: Dealing with this uncertainty is an urgent situation, particularly since it may result in some counties having no insurers at all, as well as coverage that is unaffordable for millions of Americans. But it is far from a crisis affecting most Americans and their health insurance.
The media needs to take great care to put this problem in perspective — otherwise they could unduly alarm the public and drive people to support the wrong policy solutions. Already, most Americans wrongly believe that premium increases in the relatively small non-group market affect them. So the headline should be: "Premiums Spike for SOME Americans."
The danger in Congress is that discussion will spread too far beyond the immediate need to stabilize the non-group market, opening up all the old wounds surrounding the ACA and producing stalemate.