Despite the return of the health insurance tax in 2020, insurers in the Affordable Care Act market have submitted premium rates of less than 1%, the lowest they've been since the ACA exchanges launched in 2014.
Based on the weighted average of all 50 states, the premium increase for 2020 is an estimated 0.6%, according to a blog by Charles Gaba on ACASignups.net.
This compares to a 2.8% increase for 2019, a 28% increase for 2018, a 25% increase for 2017, a 12% increase for 2016, a 13% increase for 2015 and a 15% increase for 2014.
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In the table of preliminary requests in all 50 states, only three had double-digit rate increases: Louisiana, New Mexico and Vermont.
The preliminary rates are still awaiting state approval in most cases.
WHY THIS MATTERS
With the lifting of the moratorium on the health insurance tax for 2020, insurers in the ACA market are estimated to pay a collective $16 billion in additional fees.
The HIT was expected to increase premiums.
The lower premiums this year are believed to be a correction over high rate increases in previous years, when insurers were bracing for ACA repeal and the loss of the cost sharing reduction payments from the federal government.
The loss of cost sharing reduction payments was offset by the Trump administration's decision to allow insurers to silver load their CSR costs onto their silver-tiered plans. Most consumers on these plans receive tax subsidies, so the cost is borne by the federal government.
The Centers for Medicare and Medicaid Services is again allowing for silver loading for 2020. Combined with insurer success in the ACA market and in suing the government to get CSR payments, the overcompensation may result in insurers having to pay rebates to consumers based on the ACA's medical loss ratio rule.
The MLR rule states that, based on a three-year rolling average, insurers must spend 80% to 85% of premiums collected on medical claims rather than administration. Insurers must write a rebate check to consumers if this percent is less than required.
THE LARGER TREND
ACA enrollment for 2019 dipped due to the loss of the individual mandate to buy insurance and the Centers for Medicare and Medicaid Services' earlier decisions to cut the budget for advertising, marketing efforts and navigator funds that helped consumers to enroll. Confusion over whether Republicans would repeal and replace the ACA also took a toll.
CMS Administrator Seema Verma credited a strong economy for the reason fewer individuals needed to buy insurance, since they were now covered under employer plans.
Insurers also kept premium increases lower last year and expanded their footprint in the market. In prior years, many large insurers withdrew their ACA plans due to a lack of financial success.
The 2020 open enrollment period runs from November 1 to December 15 for plans that start January 1, 2020.
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