Election 2016: High Stakes & High Premiums

Open enrollment for the Federal Exchanges is right around the corner and soon many Americans will be heading to the Exchanges for affordable healthcare options.  In an effort to increase access to care, the Exchanges provide subsidies for those unable to cover the full cost of premiums based on their percentage below the poverty level. The Affordable Care Act (ACA) has made great strides in providing care to those who normally would not have been able to receive coverage. However, this year highlights an unintended group of people with issues of access to care; those who pay full price. The Obama administration has confirmed a 22% average increase in premiums in 2017. Fortunately, families and individuals who qualify for subsidies through the Exchanges, will not feel the brunt of the increase. However, those who pay full price will have to prepare for the abrupt increase.

The rise in premiums is especially troublesome for residents in states such as Georgia and Tennessee. Blue Cross Blue Shield of Georgia, which is the only plan that covers the whole state, premiums will increase by 21%. Further, Georgia’s Humana plan is expected to increase by 67.5%.  BlueCross BlueShield of Tennessee anticipates a 62% premium increases and Cigna with an 46% increase. Insurers attribute the rise in premiums to a sicker population.  The ACA introduced an influx of new consumers who were costlier than anticipated. Outpatient spending continues to be the largest driver of premium increases. Contrary to belief, prescription drugs only account for 14.3% of premium increases which is down from 17.7% in 2015. The Center for Medicare and Medicaid Services has promulgated that there are many individuals who are eligible for subsidies on the Exchanges but have not taken advantage of the benefits. However, due to more costly than anticipated patients, insurers have left the Exchanges.  Thus, leaving potential users with fewer options for coverage and forcing many to change doctors based on network coverage.

As the Obama Administration comes to a close, the next president will have to address the rise of premiums especially for those who pay full price. Thus far, both presidential candidates have suggested solutions to help reduce the rise in premium costs. Donald Trump’s proposal includes allowing individuals to buy insurance across state lines and allowing payments toward healthcare premiums to be tax deductible. Additionally, he suggests working with states to establish high-risk pools for individuals who fail to have continuous healthcare coverage. Hillary Clinton proposes increasing premium tax credits in the Exchanges so that individuals and families do not pay more than 8.5% of their income on health insurance premiums. Further, she suggests creating a public option plan with states willing to do so and giving the Secretary of Health and Human Services the authority to modify or block unreasonable health insurance increases in states that do not have the authority. With the election less than two weeks away, we will soon see how the new administration will address the unintended consequence of rising premiums especially for those who pay full price.