With the failure of Congress to repeal and replace the Affordable Care Act (ACA) earlier this year, many Americans are now bracing for a significant increase in their health insurance premiums. In some cases, consumers could see health insurance prices increase by double digits. Some have reported that their monthly health costs are almost as much as their mortgage.
Middle-Class Hit Hardest
The middle class is expected to take the biggest hit when it comes to health insurance prices this year. These are people who are working full-time, or part-time, whose companies do not offer employer-provided health insurance.
This is forcing the middle class to purchase their health coverage from the exchange market, where low-income earners are provided subsidies to offset the costs. Those who do not qualify for subsidies must pay the full cost of their health coverage, which has seen a steady rise in price since the Affordable Care Act passed in 2010.
Subsidies and Lack of Competition
Consumers who are not eligible for tax subsidies under the ACA will see the highest health insurance prices. These are consumers who get no protection from tax credit and pay full price for health coverage in the open market.
For the 2018 enrollment period, over 83 health insurance companies abandoned the marketplace, further complicating the process. In some areas of the country, there is only one health insurance company offering coverage through the marketplace, leading to a lack of competition which leads to price hikes.
Another factor driving up health insurance costs is uncertainty at the federal level. President Donald Trump has indicated he will eliminate cost-sharing reductions to health insurance companies, reducing the ability for middle-class consumers to obtain affordable health insurance.
President Trump also signed an Executive Order in January that stopped the enforcement of the individual mandate. Under this mandate, the IRS could issue penalties to anyone who did not have health coverage, and there were indications that enforcement of this penalty was less significant for the 2017 tax year than in previous years. The uncertainty at the federal level has led many health insurance carriers to increase premiums.
Last Year Increases
For the 2017 enrollment, health insurance quotes in the marketplace rose by 25%. That figure is expected to grow even higher for the 2018 open enrollment, which begins November 1. Experts point to the fact that health insurance prices have skyrocketed almost since the start of the ACA, and choices have dwindled.
Almost 18 billion people purchase insurance through the marketplace, and about half of them do not receive subsidies. Last year, enrollment for those not eligible for government subsidies dropped by 20%, indicating that many are simply choosing to forgo coverage rather than pay high health insurance premiums, or looked for health insurance elsewhere.
There are alternatives to the health insurance marketplace if you are looking for cheaper options. Free online tools like First Quote Health let you compare health insurance quotes by simply inputting your zip code to find plans that fit your needs.