Health insurers selling Affordable Care Act plans in Florida will raise monthly premiums by nearly 45 percent on average next year, the state’s Office of Insurance Regulation said Tuesday.
Florida regulators said most of the average rate hike — 31 percentage points — came from standard plans sold on the ACA exchange at healthcare.gov. Insurers raised rates for those plans due to the political uncertainty that has plagued the healthcare debate, specifically whether the Trump administration will stop paying subsidies that lower out-of-pocket costs for low-income Americans.
Standard plans sold on healthcare.gov are the only ones that provide the subsidies, called cost sharing reductions, to consumers who earn less than two-and-a-half times the poverty level, which in 2017 was $30,000 for an individual and $51,000 for a family of three.
45% Average rate increase for 2018 plans sold in Florida that meet Affordable Care Act coverage requirements
Of the 1.43 million Floridians with an ACA plan in 2017, about three in four, or more than 1 million people, received a cost sharing reduction, according to federal estimates. Nine in 10 Floridians, or about 1.33 million received a separate subsidy that reduced their monthly rate, called the advance premium tax credit.
Most Floridians with a standard ACA plan and a premium subsidy won’t see their monthly costs rise, and some may even pay less than they did the prior year. But the brunt of the 2018 rate hikes will fall squarely on the 7 percent of Floridians, about 66,000 people statewide, who earn too much to qualify for any financial aid to lower their costs of coverage.
Penny Shaffer, market president for Florida Blue, the state’s largest health insurer, said the company will raise premiums for ACA exchange plans by 33.5 percent on average next year.
That’s more than Florida Blue had requested in June, when the company assumed that the cost sharing subsidies would be paid and proposed rate hikes ranging from 9 to 24 percent for 2018 ACA plans. But Florida insurance regulators said insurers had to account for the potential loss of cost sharing subsidies, forcing most insurers to raise premiums.
“As we’ve signaled, if the cost sharing reductions went away or if the uncertainty continued around them, there would be a rate increase,” Penny Shaffer, market president for Florida Blue, said on Tuesday.
Despite the higher premiums, Florida Blue members who receive a premium subsidy are less likely to find their coverage unaffordable if the cost sharing payments go away. That’s because the premium subsidy is pegged to the monthly rate for a standard plan — the higher the monthly rate, the higher the subsidy.
The amount of advance premium tax credit that a person can receive is based on the monthly rate for the second lowest-cost standard plan sold on the Affordable Care Act exchange on healthcare.gov. The subsidy is designed to ensure that eligible consumers never spend more than 9.5 percent of income on premiums.
Steven Ullmann, a healthcare policy expert with the University of Miami, said insurers are playing defense by raising plan premiums to deal with the uncertainty over the cost sharing subsidies.
“There’s so much indecision,” he said. “That’s the killer.”
The Trump administration has been funding cost sharing subsidies month-to-month, without making the long-term commitment that insurers say would help stabilize the ACA insurance market.
And though the U.S. Senate withdrew the latest GOP proposal to roll back the ACA on Tuesday, there are other uncertainties that add to the market’s volatility.
Will the Trump administration enforce the ACA’s employer mandate, which requires any company with more than 50 employees to offer health insurance to their workers? What about the individual mandate requiring every eligible American who doesn’t get insurance through work to buy a health plan or pay a fine that is either 2.5 percent of household income or $695 per adult and $347.50 for each child younger than 18?
The Trump administration also has slashed the federal government’s advertising and outreach budget for the upcoming open enrollment season, which has been shortened from three months last year to 45 days this year. Open enrollment for 2018 coverage on healthcare.gov runs from Nov. 1 through Dec. 15.
All of this could dissuade the very people that the ACA, also known as Obamacare, needs to thrive, Ullmann said — young and healthy individuals who don’t need a lot of healthcare.
There’s so much indecision. That’s the killer.
Steven Ullmann, University of Miami healthcare policy expert
“Those who will have a higher risk of healthcare needs will be the ones who buy the insurance,” he said.
Florida regulators approved six insurers to sell plans on the ACA exchange in 2018, and three insurers that will sell plans off the exchange but that still meet the law’s minimum coverage requirements.
The six insurers on the ACA exchange include three Florida Blue companies — Blue Cross & Blue Shield of Florida, Florida Health Care Plan and Health Options — as well as Celtic Insurance Company, Health First Commercial Plans and Molina Healthcare.
Off the exchange, Avmed, Cigna and Freedom Life Insurance will sell plans that meet the ACA’s minimum coverage requirements in 2018.
The federal subsidies for ACA exchange consumers represent a significant source of money for Florida insurers. In 2016, federal payments of cost sharing reductions, which are paid directly to insurers, totaled $1.3 billion in Florida.
A previous version of this article stated that wrong number of days for the 2018 Affordable Care Act open enrollment period. Open enrollment is 45 days.
Individual Affordable Care Act Plan Monthly Premiums for 2018
Florida insurance regulators announced proposed rates for ACA plans in 2018 on Tuesday. Below is a list of insurers and the average rate increase approved by the Office of Insurance Regulation.
- Blue Cross & Blue Shield of Florida Inc., 38.1 percent
- Celtic Insurance Company, 46.1 percent
- Florida Health Care Plans, Inc., 26.5 percent
- Health First Commercial Plans, Inc., 39.3 percent
- Health Options, Inc., 36 percent
- Molina Healthcare of Florida, 71.2 percent
- Avmed, Inc., 38.7 percent
- Cigna Health and Life Insurance Company, 68.9 percent
- Freedom Life Insurance Company of America, 80 percent
Source: Florida Office of Insurance Regulation