WASHINGTON — Premiums on the individual market are likely to shoot up and fewer people will be insured next year, thanks to President Donald Trump's latest moves on health care, according to two independent studies.
A report by the Urban Institute, a nonpartisan think tank, examined the Republican tax bill's elimination of the individual mandate, which requires people to maintain coverage or pay a penalty, along with the White House's recent move to allow customers to purchase cheaper short-term insurance plans for up to a year. These plans can reject coverage based on preexisting conditions and offer more limited benefits than plans approved by Obamacare.
The White House has argued the short-term plans will provide an affordable alternative for some customers who are priced out of Obamacare. But critics say they'll encourage people to buy inadequate insurance and raise premiums for people who need comprehensive care.
The combined effect, according to the Urban Institute report released this week, will increase premiums for insurance plans compliant with the Affordable Care Act will increase 18.2 percent in 2019 in the 43 states that don’t have limits on short-term plans that supersede the new federal rules.
Without the individual mandate, they estimate another 6.4 million people will be uninsured in 2019 while 2.5 million more people will have insurance plans that don't Obamacare's standards of "minimum essential coverage."
Despite covering fewer people, federal health spending will go up by $33 billion because federal subsidies will have to rise to match the higher premiums.
The Congressional Budget Office, the agency responsible for scoring legislation, has previously estimated 4 million fewer people would have insurance without the individual mandate in 2019, eventually rising to 13 million in 2027, and that premiums would increase by 10 percent annually as a result.
The Avalere Health report looked at the effect of another Trump administration move to open up small businesses and self-employed workers to new association health plans that can also skirt Obamacare's regulations to offer cheaper, less comprehensive coverage that can vary according to the age of the company’s workers. They expect 3.2 million people to join one of the new association health plans.
The new association health plans would also provide a cheaper option for many, even if they offered less generous care: The average plan would cost $2,900 less per year versus the group market and $9,700 less compared to the individual market.
But this would be due in large part to selection bias as younger and healthier people would be attracted to association plans that leave out essential health benefits like prescription drugs or mental health while older and sicker people would remain with comprehensive plans that cover chronic illness or expensive medication.
Without fewer healthier customers, Obamacare-compliant individual plans would see premiums rise by 3.5 percent and small group plans by 0.5 percent. The premium increases would prompt another 130,000 people to go without insurance.
Premium increases for the next year would be finalized and announced in the fall, potentially putting health care to the forefront of the midterm elections in November.
Trump has argued that higher premiums on Obamacare exchanges are likely to help pressure Democrats into supporting a repeal and replace bill, while Democrats have accused him of deliberately sabotaging the law to satisfy conservative supporters.