The number of people buying health plans on insurance exchanges created by the Affordable Care Act (ACA) should increase by an estimated 10% next year, but the growth would be greater if it weren’t for actions by the Trump administration, according to a new report released yesterday by the Congressional Budget Office (CBO).
The CBO said that the expected increase in enrollment is “limited” by White House decisions to shrink the 2018 sign-up period from 3 months to 6 weeks and drastically cut the budget for ACA advertising and outreach. Yet another speed bump is a projected 15% increase in premiums next year, due in part to “short-term market uncertainty” ― in particular, uncertainty about whether the federal government will continue to reimburse insurers for reducing out-of-pocket expenses of individuals covered by exchange plans.
President Donald Trump has threatened to stop the so-called cost-sharing reduction payments to insurers as a way of forcing congressional Democrats to negotiate a healthcare reform deal.
The CBO said that the president’s decisions to shrink the enrollment period and budget also help explain why the agency projects far fewer sign-ups over the long haul than it previously did. In March 2016, the CBO predicted that some 18 million people would buy health plans on the ACA exchanges in 2026. The new report lowers that estimate to 12 million. Another reason for the downward swing, the CBO said, is that more employers are offering health coverage to employees than anticipated, reducing the market for exchange plans.
Democrats have seized on the CBO report as further proof that Trump is setting up the ACA exchanges to fail. Trump and his Republican allies, in turn, call CBO estimates unreliable, pointing out that in 2012, the agency had projected 25 million people to be enrolled in exchange plans this year. Instead, the average monthly enrollment in ACA health plans in 2017 has been about 10 million people.
In its new report, drafted together with the Joint Committee on Taxation (JCT), the CBO acknowledges that previous enrollment projections were too high. The overpredictions may stem from less consumer interest in exchange plans than anticipated, and less inclination by employers to stop offering coverage, according to the CBO.
“Stable in Most Areas”
Aside from the effects of White House policy, the CBO said that the nongroup health insurance market ― that is, the market for individuals and families ― should “be stable in most areas of the country,” and that “insurers would be willing to sell nongroup policies in almost all areas of the country throughout the next decade.” This nongroup market includes policies sold on the ACA exchanges as well as policies sold outside the exchanges, which are not eligible for premium subsidies in the form of tax credits.
The CBO report notes that although nongroup health plans inside and outside the exchanges have become more costly, most people receiving premium subsidies don’t feel any financial hurt, because the subsidies increase in step with premiums. That still leaves unsubsidized insurance buyers vulnerable to premium hikes, which logically would dampen demand for coverage through the exchanges. Of the 10 million people enrolled in exchange plans this year, 80% receive help on premiums.
The CBO and JCT expect average monthly enrollment on the exchanges to increase to 11 million people in 2018, with nine million receiving premium subsidies. They attribute the growth next year mainly to three factors:
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Many people who might be eligible for a premium subsidy if they were to buy an ACA health plan choose nongroup coverage outside of the exchanges instead. The CBO and JCT expect that rising premiums will persuade some of these individuals to switch to an exchange plan so they can obtain a premium subsidy.
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Some nongroup health plans sold outside the exchanges will no longer be available in 2018, creating an exodus to the exchanges.
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Expiration of federal funding for the Children’s Health Insurance Program (CHIP) at the end of September will cause parents to seek ACA coverage. This CBO estimate does not take into account a bipartisan plan emerging in the Senate to extend CHIP for 5 more years.
The new CBO report delves deeply into premium and cost-sharing subsidies offered under the ACA, but goes beyond the healthcare reform law to examine how the federal government underwrites other forms of healthcare coverage. Spending on Medicaid and CHIP in 2017 will come to $296 billion, for example, not much more than the $287 billion in tax breaks that Americans will receive because their coverage is work-related. Premiums that employers pay for their employees’ health plans are excluded from individual payroll and income taxes.
Follow Robert Lowes on Twitter @LowesRobert
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