This study analyzes the 2018 premium increases for health insurance plans offered on the Affordable Care Act’s individual marketplaces. Specifically, it compares the 2018 premiums to the 2017 premiums by analyzing the cost changes in three different plan types by rating area: benchmark Silver, lowest-cost Bronze, and lowest-cost Gold plans. It finds:
- Benchmark plans from 2017 that are still offered in 2018, even if not as the benchmark, rose by an average of 29 percent—the highest average increase since the ACA began;
- Only 17 percent of all rating areas have the same benchmark plan as 2017;
- The average 2018 benchmark plan premium is 36 percent higher than the average 2017 benchmark plan; and
- The lowest-cost Bronze premium and the lowest-cost Gold premium both increased on average by about by 20 percent.
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The Affordable Care Act (ACA) set substantial new federal requirements for health insurance plans and the insurers that provide them. These requirements significantly altered the way insurance is regulated, which was traditionally left to the states. The ACA included in Section 1332 the option for states to apply for a waiver from many of these regulations. However, the myriad stipulations tied to these 1332 State Innovation Waivers limit states’ ability to regain control of their own insurance regulations. Further, states have no guarantee they will be granted a waiver, even if they meet all of the ACA’s requirements for obtaining one.
In response to these issues, two Senate committees have introduced (or at least drafted) legislation that would solve many of the problems that states have had obtaining 1332 waivers. In addition to easing some standards and shortening timeframes for decisions, the bills also provide a standard path for states to gain these waivers in certain circumstances.
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Recall that under Democratic Governor Peter Shumlin Vermont committed to a single-payer for the state but had to abandon the effort in 2015. Why? The cost was staggering — $4.3 billion when Vermont’s entire fiscal 2015 budget, including both state and federal funds, was about $4.9 billion. That’s right: essentially doubling the size of the government.
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Immediately following the vote on the House GOP’s American Health Care Act (AHCA), misinformation about the bill began spreading like wildfire, stoking fears and outrage. The issue which seems to be getting the most attention is the potential impact this legislation could have on people with pre-existing conditions.
Under AHCA, the federal guaranteed issue requirement would NOT be repealed, meaning that insurers in every state would still be prohibited from denying insurance coverage to anyone on the basis of a pre-existing condition. In no circumstance would this protection be denied, though it seems much confusion surrounding this protection has stemmed from the adoption of several amendments to the underlying legislation. It is unlikely that many Americans will be impacted by the provisions of one particular amendment in question, the MacArthur amendment. It is also important to remember that the AHCA must still be passed by the Senate and is likely to undergo significant reforms before it does, in which case, the legislation would again have to be passed by the House.
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In the United States, the difference between being in poverty and out of poverty is a job. The nation’s public assistance programs successfully alleviate suffering among low-income households, but they fail to raise self-sufficiency because they do not connect able-bodied people to work. Going forward, policymakers must incorporate work requirements throughout the safety net, which are proven to enhance programs like TANF and the EITC. Medicaid is an ideal candidate for work requirements, as it would encourage over 1 million people to find work without greatly disrupting the program itself.
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On April 6, the House Rules Committee discussed an amendment to the American Health Care Act (AHCA) that would allocate $15 billion over 10 years to be used to develop an invisible high-risk pool (IHRP)—a risk-sharing mechanism meant to alleviate issues caused by the uneven distribution of health care costs. In a marketplace with some form of guaranteed issue, efficient risk-spreading mechanisms are a must. The creation of a IHRP program is a logical next step. However, if the program is improperly funded and fails to account for geographical differences between states and regions, it will only result in a marketplace marked by the same problems plaguing the current marketplace: rising premiums and lack of insurer competition.
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The AHCA will suffer its share of criticism and praise as it moves through the legislative process. Secretary Tom Price has stated this is merely round one in the effort of reform. The next two phases will involve broader regulatory patches and targeted legislation. Initially, from a regulatory perspective, the first draft has the potential to eliminate $3.4 billion in costs and create more than 72 million hours of paperwork savings. This could generate tangible benefits to insurers, businesses, and ultimately, patients. Consider a law that imposed $53 billion in costs and 176 million paperwork burden hours. Even a 20 percent to 30 percent cut could create tremendous regulatory cost reductions.
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While the average estimate shows nearly 21 million people have benefitted from Obamacare, it’s important to note that some people currently enrolled in Medicaid could have enrolled in Exchange coverage with nearly full subsidization had their state not expanded Medicaid, and would likely be eligible for whatever new subsidy structure might replace the current system. Regarding those in the Individual Market, not all of these individuals are receiving subsidies and would therefore not be financially impacted by the repeal. Making reasonable assumptions and accounting for those who lost insurance because of the ACA, and setting aside any assistance that would be provided by ACA replacement policies, the number of people who, on net, are potentially at risk of being negatively impacted is likely closer to 13-14 million.
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On Tuesday the Internal Revenue Service (IRS) announced some tax benefits will increase in 2017 in order to adjust for inflation. According to the IRS the standard deduction for married couples in 2017 will be $12,700, up from $12,600, and both the earned income tax credit and the amount exempt from the estate tax will also see slight increases. The top individual tax rate will apply to those making $418,400 or more as opposed to $415,050 or more in 2016.
Yesterday the American Action Forum released an analysis of Donald Trump’s proposal to cut 70 to 80 percent of U.S. Regulations. The analysis finds that in order to achieve this goal, between $700 and $800 billion in regulatory costs would need to be cut. The analysis further shows that it would likely take a generation in order to accomplish this goal.
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Many variables remain up in the air as we contemplate what Obamacare would look like without functioning exchanges, but the failure of the exchanges in some states might provide an opportunity to amend and improve upon the ACA, and move the American health care system towards a freer market system where individuals are free to enroll in any health insurance plan that is for sale, and where insurers have the freedom to sell the plans that are the most appealing to potential buyers. Treating markets where the ACA has failed as opportunities rather than crises might be the first step in achieving sustainable health care reform.