Federal subsidy payments will drop, and now more people can buy Obamacare plans.
Premiums are expected to drop more than expected in the next two years in all but one state, according to a new analysis by The New York Times, as competition for customers increases on healthcare.gov, the federally-run exchange for most states.
Analysts say the reason for that is competition, and the government’s willingness to provide generous subsidies that allow carriers to sell much more affordable coverage.
The subsidies, known as cost-sharing reduction payments, prevent consumers from being priced out of the market. According to the latest figures from the Kaiser Family Foundation, nearly 9 in 10 Americans who bought coverage on the exchanges in 2016, a record year for enrollment, received federal subsidies. The average subsidy per enrollee was $2,089.
“We’re going to have fewer people locked out,” said Katherine Hempstead, a senior adviser at the foundation. “We’re going to have more people with financial help to pay for coverage.”
The news about lower premiums comes as a key battle is heating up in Congress. Democrats have been trying to retain the subsidies for as long as they can and are attempting to force a floor vote on legislation that would extend the federal subsidy payments and “defund” tax-cut legislation Republicans recently signed into law that includes them.
The legislation, called the AMERICAN Health Care Act, sponsored by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., would have put the insurer subsidies on hold until 2020 and eventually leave about six million people without access to insurance through the exchanges. It was never able to pass the Senate, though Democrats have vowed to press ahead with legislative efforts.
Many Democrats favor the Alexander-Murray plan, which Republicans oppose, because they say it addresses many of the issues with the Affordable Care Act, including high deductibles and premiums, and would encourage insurers to offer broader options for customers.
On Tuesday, Democrats were buoyed by an analysis from Avalere Health, which found that premium for next year would come in 5.6 percent lower than the estimate it made for 2016. The average premium for a benchmark “silver” plan would be $296, or $153 below the last benchmark survey by the government.
According to Bloomberg, the Congressional Budget Office is expected to release its analysis next week. Republicans are expected to argue that the CBO projection predicts higher insurance costs for some consumers and would hurt coverage for those who need the subsidies.
If the health care exchanges go into a death spiral, that could cost Republicans seats in November’s midterm elections. Politicians in the states that rely heavily on the exchanges, especially in Pennsylvania, Ohio and Iowa, are closely watching the ongoing battles to maintain the subsidies.