Subsidies drive consumer decisions on ACA coverage

July 04--As premiums spiked in 2017, the market where people buy their own health insurance saw a significant decline in enrollment among those who don't qualify for federal subsidies.

That is the conclusion of a new federal report that finds the number of unsubsidized individual-market enrollees in the U.S. dropped last year by about 1.27 million people, or roughly 20 percent.

Enrollment among those who received tax credits, meanwhile, dropped by just 3 percent, according to the report from the federal Centers for Medicare and Medicaid Services (CMS).

The federal agency pinned the blame on premium increases that averaged 21 percent across the country. In Minnesota, where the premium jumps were even higher, enrollment in the unsubsidized market was cut in half while the number buying with tax credits grew by 45 percent.

"Nationally, the decrease in enrollment among unsubsidized enrollees was driven by large premium increases, but also likely by cutbacks in outreach and general confusion surrounding the [federal Affordable Care Act] as the Trump administration took office," said Larry Levitt of the Kaiser Family Foundation via e-mail.

The individual market primarily serves people under age 65 who are either self-employed or don't get coverage from their employer. The ACA brought sweeping changes to the individual market, where insurers before the federal health law could deny coverage to people based on pre-existing health conditions.

The new report underscores trends that were previously noted in Minnesota, where insurers reported a large decline in individual market enrollment even as more Minnesotans are purchasing coverage through the MNsure health exchange. People at certain income levels who buy through MNsure receive tax credits that substantially discount out-of-pocket premium costs.

The number of Minnesotans buying individual coverage without tax-credit subsidies declined by 53 percent between 2016 and 2017, with the tally falling to 92,539, according to the new report. The number buying with tax credits via MNsure increased by about 45 percent to 61,932.

Individual-market premiums in Minnesota jumped an average of 50 percent between 2016 and 2017.

"The high price plans on the individual market are unaffordable and forcing unsubsidized middle class consumers to drop coverage," said CMS Administrator Seema Verma in a statement.

Under the Affordable Care Act, people qualify for tax credits based on a combination of their income and the price of coverage. So, as premium costs increase, more people get help via subsidies, noted Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for insurers.

Even so, that means "many Minnesotans who don't get help are having a hard time paying more each month," Schowalter said in a statement.

There's a broad consensus that individual health insurance is unaffordable for many middle-class people, said Levitt of the Kaiser Family Foundation. But there's not agreement about what to do about it.

"Some favor reinsurance or extending subsidies to provide premium relief to middle-class consumers," Levitt said via e-mail. "The Trump administration is promoting an expansion in loosely regulated short-term health plans, which will offer cheaper insurance to people who are healthy but will generally exclude those with pre-existing conditions."

Sabrina Corlette, a researcher with Georgetown University, noted that Minnesota is one state that has taken the lead in trying to help consumers with the state's reinsurance program, which is covering many costs for carriers in the market related to people with unusually expensive health care needs. Minnesota is spending up to $542 million on the program over two years.

Corlette added in an e-mail: "But the only real long-term solution -- and it's a moon shot -- is to bring down the cost of health care in this country."

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