Starting tomorrow, November 1, eligible Americans can sign up through Health Insurance Marketplaces for coverage for 2019. According to a new government report, the monthly premiums for the benchmark plans sold on HealthCare.gov will average $405 for a twenty-seven-year-old generally. For twenty-seven-year-olds with income at or below $25,000—a large portion of the young people shopping on the individual market—premium tax credits will lower their payments to $140 per month. Nearly four out of five (79 percent of) enrollees can find a Marketplace plan for $75 or less.
Health plans sold through the Marketplaces are available to people with pre-existing conditions—no questions asked. They cover essential health benefits with no annual or lifetime limits. This year, health plans sold outside of the Marketplaces may include newly expanded, largely unregulated short-term, limited-duration plans. Consumer Reports warns that such plans may seem cheap but have hidden costs due to high deductibles, limited benefits, and exclusion of payment for care for pre-existing conditions. They also may be illegal, as insurers, groups such as American Heart Association and AARP, and physicians contend.
Here are five observations about what Marketplace consumers will pay in 2019. This analysis is based on new data on Health Insurance Marketplace premiums for the thirty-nine states that use the federally run website, HealthCare.gov; comparable data for states that run their own Marketplaces are not available.
1. Premiums are not as bad as they seem—but could be better.
The United States has the most expensive health system in the world. As such, it is not surprising that Marketplace premiums are high. Yet, in 2018, the average Marketplace premium for all plans was only about 4 percent higher than the average premium for employer-based plans (although these plans have different benefits, cost sharing, and enrollees). Average Marketplace premiums are projected to fall in 2019, whereas employer premiums are projected to rise by 4 to 5 percent. However, Marketplace premiums could have been lower than they are. A recent analysis estimated that Trump administration policies increased Marketplace premiums for all enrollees by 6 percent and for benchmark plan enrollees by 16 percent ($816 for 2019).
2. Competition helps.
The new report shows that four of the five states with only one insurance company offering Marketplace plans are in the top six most expensive states when it comes to 2019 Marketplace premiums. And those high premiums cannot just be attributed to higher costs in providing care: only two of these states (Alaska and Delaware) are also in the top six most expensive states when it comes to overall health spending; Nebraska is twentieth, Wyoming is twenty-first, and Mississippi is thirty-fourth.
3. State reinsurance programs work.
From 2018 to 2019, average premiums will fall by 6 percent in the five HealthCare.gov states with reinsurance programs (Alaska, Maine, New Jersey, Oregon, and Wisconsin) compared to 1 percent in HealthCare.gov states without such programs. Created through state innovation waivers, reinsurance programs lower premiums by helping to fund the cost of the most expensive enrollees. This has contributed to New Jersey having the second-lowest premiums in all HealthCare.gov states. Alaska’s Marketplace premiums next year will be nearly 25 percent lower than they were before it implemented its reinsurance program two years ago. Among states that run their own Marketplaces, reinsurance contributed to premiums falling by 7.4 to 17 percent in Maryland and by 7.4 to 27.7 percent in Minnesota.
4. Expanding Medicaid lowers private premiums.
Economists estimate that Marketplace premiums are 11 percent lower in states that expanded Medicaid compared to those that didn’t, controlling for demographics and other characteristics. This may be because Medicaid better serves low-income people with fluctuating income and more health problems than does private insurance. This pattern appears to continue in HealthCare.gov states. In 2019, premiums in Medicaid expansion states are 12 percent lower than those in states that have not expanded the program (not adjusting for other state characteristics). Similarly, the drop in premiums from 2018 to 2019 was greater in states that did versus did not expand Medicaid (3 percent versus 0 percent drop).
5. State-based Marketplaces offer more time to sign up and lower average premiums.
Eleven states and the District of Columbia fully run their own Marketplaces. Seven of them will let residents sign up after the general December 15 deadline: through the end of December (Rhode Island), mid-January (California, Colorado, Massachusetts, and Minnesota), or January 31 (District of Columbia and New York). State-based Marketplaces (also including Connecticut, Idaho, Maryland, Vermont, and Washington) set their own policies and conduct their own outreach within federal parameters. In 2018, their premiums were 17 percent below those of states using HealthCare.gov and their enrollment increased by 0.2 percent between 2017 and 2018 while it fell by 5.3 percent in states using HealthCare.gov.
In sum, while weakened in some respects by interference from policymakers opposed to the Affordable Care Act, the Health Insurance Marketplaces continue to be a significant added value to the nation’s health care landscape. State as well as federal government officials should take into account the lessons described above when considering how to improve health care affordability and accessibility in the coming year and beyond.