Obamacare benchmark premiums up 37 percent in 2018 after subsidy cut-off

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By Michael Erman

NEW YORK (Reuters) – The average monthly premium for benchmark Obamacare insurance plans will surge around 37 percent in 2018, the U.S. Department of Health and Human Services said on Monday, fueled by the Trump administration’s suspension of billions of dollars in subsidy payments to health insurers.

The average monthly premium for the second-lowest cost “silver” plan for a 27-year-old will rise to $411 a month in 2018 from $300 a month this year, before tax credits are applied.

Federal tax credits that help individuals buy coverage will also rise sharply, according to a report from the health department’s Office of the Assistant Secretary for Planning and Evaluation.

As a result, people eligible for tax credits based on their income may end up paying less per month for insurance, while middle-class Americans who do not qualify for the credits will face much higher prices.

“This data demonstrates just how rapidly Obamacare’s exchanges are deteriorating with sky-rocketing premiums year after year, more than half of Americans with no more than two insurers to choose from, and the taxpayer burden exploding,” HHS spokeswoman Caitlin Oakley said.

The agency said the average advance premium tax credit paid to current enrollees in 2018 will be $555, up 45 percent from 2017, when it paid $382. That is more than double the $259 in tax credits the average enrollee received in 2014.

But those ineligible for the tax credits will face sharply higher costs.

Earlier this month the Trump administration cut off subsidies that insurers use to reduce copays and other out-of-pocket costs for low-income Americans under former President Barack Obama’s signature healthcare law.

President Donald Trump has vowed to repeal the Affordable Care Act, widely known as Obamacare, though fellow Republicans in Congress have so far failed to agree on a replacement. The administration has since taken steps to undermine the law, moves that are expected to cut into enrollment for 2018.

Insurers must still provide discounts on out-of-pocket costs to eligible consumers enrolled in the most popular “silver” plans, even without the government subsidies. To recoup those costs, insurers raised premiums on those plans. 

Premiums for the benchmark plans rose more modestly after the plans first went on sale in 2013. But they jumped 24 percent on average for 2017 after insurers found they were covering patients who were sicker than anticipated.

The “silver” plan is in the bottom half in terms of how much of an individual’s health costs are covered, between “bronze” and “gold.” There are also “platinum” plans on the federal Healthcare.gov website.

In addition, the percentage of enrollees who could choose a plan costing less than $75 per month in premiums rose to 80 percent for 2018, compared with 71 percent this year, HHS said.

Health insurers such as UnitedHealth Group Inc, Aetna Inc and Humana Inc exited most of the states where they sold Obamacare plans earlier this year, citing issues including uncertainty due to repeal efforts and the subsidy payments. National players remaining in the market include Anthem Inc, Molina Healthcare and Cigna Inc.

As a result, 51 percent of U.S. counties have only one insurer selling Obamacare plans in 2018. Enrollment in the individual insurance markets begins on Nov. 1

(Reporting by Michael Erman; Editing by Michele Gershberg and Dan Grebler)



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