Health insurance premiums for plans purchased through Affordable Care Act marketplaces for 2020 decreased in 31 states, a new analysis shows. Costs fell by an average of 3.5% for the lowest-priced silver plans, according to a new report prepared by the Urban Institute, with funding from the Robert Wood Johnson Foundation.
Researchers examined premium changes in the lowest-cost silver plan for a 40-year-old nonsmoker from 2017-2020, finding premiums stabilized in the last two years. The number of insurers participating also increased in 2019 and 2020, suggesting that many insurers feel the markets are stable, functional, and potentially profitable.
The analysis uses the lowest-cost silver plan because it is the entry-level price for standard coverage and qualifies for cost-sharing reductions. It correlates with premiums for the second lowest-cost silver plan, or benchmark premium. These lower-cost plans tend to have high enrollment.
This is a contrast to 2018 and 2019, when the ACA marketplaces experienced considerable turmoil that resulted in huge swings in premiums, leading to concerns about stability and long-term viability. Additionally, there was fear that not enforcing the individual mandate would threaten the risk pool and force insurers to increase premiums to cover the additional risk.
Researchers say the 2020 premium decreases are a result of the marketplaces stabilizing after a period of uncertainty in 2017-2018, driven by the Trump administration eliminating funding for the ACA’s cost-sharing reductions, Congress eliminating the individual mandate penalty, and other regulatory changes.
Researchers say that most low-cost silver premium states had more competition. This was often created by the participation of at least one Medicaid insurer, several other non-Medicaid insurers offering plans, or the state instituting a reinsurance program — a reimbursement system that protects insurers from very high claims. States with higher-priced silver premiums typically had little competition.
“The individual market has clearly stabilized since the disastrous premium spikes of 2018,” said Kathy Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “But some markets remain uncompetitive, and affordability is a problem across the board for the unsubsidized.”
In 2018, the U.S. average lowest silver plan premium increased sharply by 29.7%, followed by a small decrease of 0.4% in 2019. For 2020, lowest silver premiums have further stabilized and experienced an average 3.5% decrease. In 2020, the average lowest silver plan premium is $426, with the lowest in Minnesota ($298) and highest in Wyoming ($871).