Who's Ready For A 15% Increase To Their Health Insurance Premium In 2019? | The Motley Fool Insurance premium Increase

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When Donald Trump won the electoral vote 1 1/2 years ago, the American people knew change was coming. Topping President Trump's list of things to do once in office was to repeal including replace the Affordable Care Act (ACA), which is more commonly famous as Obamacare. Of course, things didn't travel according to plan.

With Republicans in control of the legislative branch of the government, it was widely expected that they would own no trouble repealing including replacing Obamacare. However, working with a razor-thin more in the Senate, Republican lawmakers including the chief of state were unable to come to an agreement on healthcare reform after countless tries in 2017. Instead, Trump including the GOP-led Congress steadily own been dismantling some of the health law's core components, leaving one a shell of former President Barack Obama's hallmark healthcare legislation.

President Trump addressing Department of Homeland Security employees. Image source: U.S. Department of Homeland Security via Flickr.

Who's ready for another double-digit charge increase?

Slowly picking to bits Obamacare does own a purpose for President Trump: It likely will send the program into a "death spiral," whereby premiums rise at a rapid pace including healthy individuals drop out of the program altogether. Such a move would prompt lawmakers from both sides of the aisle to come together including create a new health plan. But in the interim, it way painfully high increases for those folks signed up with Obamacare who aren't privy to its remaining subsidies.

According to a newly released report from the Congressional Budget Office (CBO), premiums for benchmark plans -- i.e., the second-lowest-cost silver scheme listed on ACA exchanges -- are expected to rise via 15% in 2019 including then average a 7% increase per year thereafter, via 2028. Mind you, this 15% increase comes after the Department of Health including Human Services announced in overdue October 2017 that benchmark scheme premiums would be rising via an average of 37% in 2018. 

Then again, the CBO's estimate could prove conservative for next year. Back in overdue January, insurance agent Covered California in the nation's nearly all populous state released a inform of entitled, "The Roller Coaster Continues" that described what it believes will be bottom-line charge hikes of amidst 16% including 30% in 2019. Though these are estimates, including rate hikes often aren't finalized until September or October, when a big insurance agent in the fifth-largest economy in the world speaks, you listen. 

Ultimately, the CBO estimates that the total number of uninsured will rise via 3 million next year, to 32 million, including the non-elderly uninsured rate will hit 13%. By 2028, some 35 million people are forecast to be without insurance assuming the remnants of Obamacare are kept in place. 

Image source: Getty Images.

Three reasons Obamacare premiums keep soaring

If we had to point a finger at the factors behind this rapid rise in healthcare premiums, three would stand out.

1. The elimination of the separate mandate in 2019

The first, which will take shape in 2019, is the elimination of the separate mandate. The separate mandate is the actionable component of Obamacare that requires individuals to purchase health insurance or pay a economic penalty, famous as the Shared Responsibility Payment (SRP). If you choose to travel uninsured including don't pass for an exemption, your SRP would be the greater of 2.5% of modified adjusted gross income or $695 per adult.

However, when the Tax Cuts including Jobs Act was passed in December, it, among more things, outlined the elimination of the separate mandate beginning in 2019. The mandate is a crucial cog of Obamacare that encouraged the enrollment of healthier individuals who would otherwise tempt fate including remain uninsured. The premiums of these healthy individuals are sorely needed via insurance companies to offset the higher costs associated with sicker individuals allowed to enroll under Obamacare.

Without this mandate, it's widely believed that some healthier individuals will remain on the sidelines since there's no longer the fear of economic penalty. Meanwhile, the patient population for remaining ACA insurers will include a higher number of sicker members relative to healthy members.

Image source: Getty Images.

2. President Trump doing absent with cost-sharing reductions

Last year, Donald Trump also announced the end of cost-sharing reductions, or CSRs, which are one of the two key subsidies given to lower-income individuals including families. Cost-sharing reductions were given to people earning amidst 100% including 250% of the federal poverty level, including they helped considerably lower the cost of doctor visits via offsetting some of the patient's duty for copays, coinsurance, including deductibles.

How was Trump able to hatchet such a critical subsidy, you ask? The answer lies with a long-standing legal situation initiated via House Republicans all the way in reverse in 2014. The House GOP, which filed suit again Sylvia Burwell, who was then the Secretary of the Department of Health including Human Services, alleged that all funds apportioned to the ACA should be approved via Congress, but they weren't going via these traditional channels. As a result, the House GOP intimated that CSRs were illegal.

In May 2016, District of Columbia Judge Rosemary Collyer agreed with House Republicans, albeit she stayed her judgment with the expectation that the Obama management would file an appeal, which came in shortly thereafter. This call had been continued on many occasions, even into the Trump presidency.

Trump had been using the idea of dropping the call as a dangling carrot to incite teamwork amidst Democrats including Republicans on healthcare reform, but, as noted, that didn't work. Ultimately, Trump simply dropped the appeal, which put Collyer's judgment into effect including ended cost-sharing reductions.

Though the Advanced Premium Tax Credit remains in place including continues to lower premiums for individuals including families earning under 400% of the federal poverty level, the lack of CSRs makes affording medical care a challenge for low-income individuals. At the closing of ACA enrollment for 2017, 7.05 million of the 12.2 million enrollees qualified for cost-sharing reductions. 

Image source: Getty Images.

3. An insurance agent exodus

The third reason healthcare premiums are soaring is the lack of scheme options for consumers to choose from.

Long before President Trump took office, wide-ranging health insurers were expressing their displeasure with Obamacare. Many had been losing money on the ACA's exchanges, in spite of the belief when Obamacare was initially rolled out that they'd be overwhelmingly profitable. These losses were the result of healthy individuals not being coerced via initially low Shared Responsibility Payments to enroll, which led to sicker enrollees flooding into the system including very much pushing up expenditures for health insurers. Despite many efforts to improve young adult enrollment, it wasn't enough to counteract the higher costs associated with treating sicker people who, under Obamacare, couldn't be turned absent via insurers.

Heading into 2018, Avalere estimated that 41% of all U.S. counties were expected to own just one insurance agent offering a health plan. This comes after UnitedHealth Group (NYSE:UNH), the nation's largest insurer, pulled out of 31 of 34 states in 2017. After UnitedHealth Group lost $475 million from Obamacare in 2015 including predicted $650 million in ACA losses in 2016, it was no surprise to see the nation's largest health insurance agent critical of the ACA. 

Last year, insurers Aetna and Humana, which were denied the right to blend via federal regulators, also announced their intended departure from the ACA exchanges in 2018. Without these larger players, those not many insurers that do remain gain significant pricing control including own little incentive to lower their premiums to attract new members. In more words, the bargaining control is totally with the insurer. 

If there's a bright side here, it's that nearly all Americans receive health insurance via their employers or still pass for the Advanced Premium Tax Credit. But for those folks who are uninsured including wanting health insurance or earn too much to pass for subsidies, things are one expected to get worse.

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