For ACA Enrollees, How Much Premiums Rise Next Year is Mostly up to Congress

For ACA Enrollees, How Much Premiums Rise Next Year is Mostly up to Congress  | KFF

Source: Kaiser Family Foundation, by Cynthia Cox and Krutika Amin

Health insurers are now submitting to state regulators proposed 2023 premiums for plans offered on the Affordable Care Act (ACA) Marketplaces. Changes in these unsubsidized premiums attract a lot of attention, but what really matters most to the people buying coverage is how much they pay out of their own pockets. And the amount ACA Marketplace enrollees pay is largely determined by the size of their premium tax credit. Generally speaking, when unsubsidized premiums rise, so do the premium tax credits, meaning out-of-pocket premium payments hold mostly steady for people getting financial assistance.

For just over a year, ACA Marketplace enrollees have benefited from enhanced tax credits under the American Rescue Plan Act (ARPA), which Congress passed as temporary pandemic relief. The enhanced assistance lowers out-of-pocket premiums substantially, and millions of enrollees saw their premium payments cut in half by these extra subsidies. ACA Marketplace signups reached a record high of 14.5 million people in 2022, including nearly 13 million people who received tax credits to lower their premiums.

Soon, the vast majority of these nearly 13 million people will see their premium payments rise if the ARPA subsidies expire, as they are set to at the end of this year.

The ARPA subsidies were enacted temporarily for 2021 and 2022 as pandemic relief, but congressional Democrats are considering extending or making the expanded subsidies permanent as a way of building on the ACA, as President Biden had proposed during his 2020 campaign. If Congress does not extend the subsidies, out-of-pocket premium payments will return to their pre-ARPA levels, which would be seen as a significant premium increase to millions of subsidized enrollees. In the 33 states using HealthCare.gov, premium payments in 2022 would have been 53% higher on average if not for the ARPA extra subsidies. The same is true in the states operating their own exchanges. In New York, for example, premiums for tax credit-eligible consumers would be 58% higher if not for the ARPA. Such an increase in out-of-pocket premium payments would be the largest ever seen by the millions receiving a subsidy. Exactly how much of a premium increase enrollees would see depends on their income, age, the premiums where they live, and how the premiums charged by insurers change for next year.

For states, the timing of Congressional action on ARPA subsidies matters both for rate review and state enrollment systems. State-based exchanges – as well as the federal government, which operates HealthCare.gov – will need to reprogram their enrollment websites and train consumer support staff on policy changes ahead of open enrollment in November. States will start making these changes as soon as this month. Additionally, as insurers submit premiums for review, state insurance commissioners and other regulators must assess the reasonableness of 2023 rates, and some of that determination will depend on the future of ARPA subsidies. The non-partisan National Association of Insurance Commissioners (NAIC) wrote to Congress asking for clarity on the future of ARPA subsidies by July.

For insurers, the timing matters because 2023 premiums get locked in later this summer. Last summer, when insurers were setting their 2022 premiums, some said the ARPA had a slight downward effect on their premiums, based on the risk profile of enrollees. Insurers are now in the process of setting 2023 premiums and some might factor in an upward effect on premiums if they expect ARPA subsidies to expire. Premiums for 2023 are locked in by this August, so if Congress does not act before its August recess, whatever assumptions insurers make about the future of ARPA subsidies will be locked in to their 2023 premiums. Additionally, although this is not necessarily at the same scale of the uncertainty seen in 2017 surrounding the ACA repeal and replace debates (when many insurers explicitly said that uncertainty was driving their premiums up), it is possible that some insurers will price 2023 plans a bit higher than they otherwise would, simply because of uncertainty around the future of the ARPA’s enhanced subsidies. The NAIC letter to Congress warned that “uncertainty may lead to higher than necessary premiums.”

For enrollees, the timing matters both for knowing how much they will pay and for maintaining continuous coverageNearly all of the 13 million subsidized enrollees will see their out-of-pocket premium payments rise if the ARPA subsidies expire. But if the subsidies are renewed by Congress, but not until the end of the year right before subsidies are set to expire, there could still be a disruption if states and the federal government do not have enough lead time to update their enrollment websites to reflect the enhanced subsidies. In this scenario, the millions of enrollees who currently have access to $0 premium Marketplace plans might have to pay a premium in January – putting them at risk of losing coverage due to non-payment. Similarly, middle-income enrollees might temporarily lose access to advanced payments of the tax credit in the month of January, making it unaffordable for them to maintain coverage.

Congress’s action or inaction on ARPA subsidies will have a much greater influence over how much subsidized ACA Marketplace enrollees pay for their premiums than will market-driven factors that affect the unsubsidized premium. Even if unsubsidized premiums hold steady going into 2023, the expiration of ARPA subsidies would result in the steepest increase in out-of-pocket premium payments that most enrollees in this market have seen. This would essentially be a return to pre-pandemic normal, but the millions of new enrollees and others who have received temporary premium relief may not see it that way.

A Reduction In Medicare Part B Premiums Remains In Play. Here’s Where Things Stand

A possible reduction for Medicare Part B premiums is still in playSource: CNBC, by Sarah O’Brien

For Medicare beneficiaries wondering whether their Part B premiums could be reduced, the waiting continues.

More than three months after Health and Human Services Secretary Xavier Becerra ordered a reassessment of this year’s $170.10 standard monthly premium — a bigger-than-expected jump from $148.50 in 2021 — it remains uncertain when a determination will come and whether it would affect what beneficiaries pay this year.

 

“A mid-course reduction in premiums would be unprecedented,” said Tricia Neuman, executive director of the Medicare policy program at the Kaiser Family Foundation.

A spokesperson for the Centers for Medicare & Medicaid Services said the agency continues to reexamine the premium and will announce further information when it’s available.

About half of the larger-than-expected 2022 premium increase, set last fall, was attributed to the potential cost of covering Aduhelm — a drug that battles Alzheimer’s disease — despite actuaries not yet knowing the particulars of how it would be covered because Medicare officials were still determining that.

By law, CMS is required to set each year’s Part B premium at 25% of the estimated costs that will be incurred by that part of the program. So in its calculation for 2022, the agency had to account for the possibility of broadly covering Aduhelm.

Things have changed, however.

Several weeks ago, CMS officials announced that the program will only cover Aduhelm for beneficiaries who receive it as part of a clinical trial. Additionally, the per-patient price tag that actuaries had used in their calculation last year was cut in half, effective Jan. 1, by manufacturer Biogen — to $28,000 annually from $56,000.

“Certainly the rationale for an increase that high is gone,” said Paul Ginsburg, a nonresident senior fellow at the Brookings Institution and a health care policy expert.  “The question would be what’s administratively feasible.”

If a premium reduction occurs, there’s also the chance it could be applied for 2023 instead of 2022. There have been year-to-year drops in the Part B premium in the past for various reasons, including legislative changes to how the premium is calculated.

“If I were administering this, I’d be concerned about setting a precedent for making changes in the middle of the year,” Ginsburg said.

It’s also possible that lower-than-projected spending on Aduhelm could be at least partially offset by increased costs in other areas of Part B coverage, which includes outpatient care and medical equipment. While Medicare Part D provides prescription drug coverage, some medicines are administered in a doctor’s office — as with Aduhelm, which is delivered intravenously — and therefore covered under Part B.

“Even if fewer people are using Aduhelm than originally projected and at a lower price than assumed, the actuaries may be inclined to take into account other changes that could moderate that amount,” Neuman said.

Roughly 6 million Americans suffer from Alzheimer’s, a degenerative neurological disease that slowly destroys memory and thinking skills, and has no known cure. It also can destroy the lives of families and friends of those with the disease.

Most of these patients are age 65 or older and generally enrolled in Medicare, which covers more than 63 million individuals. In 2017, about 2 million beneficiaries used one or more of the then-available Alzheimer’s treatments covered under Part D, according to the Kaiser Family Foundation.

The Drivers of Health Insurance Premium Changes for 2017

 

rising healthcare costs
The American Academy of Actuaries offers an early look at what’s driving changes in premium in the Affordable Care Act (ACA) individual and small group markets. Academy Senior Health Fellow Cori Uccello said, “Increased health care costs and the end of the ACA’s transitional reinsurance program are two of the biggest factors pressuring rates higher. The one-year moratorium of the health insurance provider fee will partially offset these increases.”

The issue brief identifies the following factors that will affect 2017 premiums:

  • The underlying growth of health care costs: Although increases in health care spending are still relatively low, prescription drug spending is expected to increase faster than other medical spending.
  • The sun-setting of the ACA’s transitional reinsurance program: Each year, the gradual reduction in the reinsurance program has increased premiums. The final impact will occur in 2017 when projected claims are expected to increase 4% to 7% due to the program ending in 2016.
  • The composition of the risk pool and any changes in the assumptions used in premium calculations: Insurers will revise their assumptions for underlying 2017 premiums if enrollment levels, risk profiles, or claims are different than expected when they developed 2016 premiums.
  • The one-year moratorium of the ACA health insurance provider fee: This will lower premiums by 1% to 3%.
  • The repeal of the ACA’s original expansion of the small group definition, and modifications to provider networks:Premium changes for individuals will reflect increases in age, and changes in geographic location, family status, or benefit design. If a consumer’s plan was discontinued, the premium change will reflect the increase or decrease resulting from being moved into a different plan. Average premium change information (released by insurers or states) could reflect consumers moving to different plans when their plan was discontinued.

Many Employers Are Seeing Premium Increases

Despite the Affordable Care Act, 90% of employers face increasing premiums for employee health plans, according to a survey by Arthur J. Gallagher & Co. “By far, the top benefit concern among employers is the rising cost of group medical coverage. Employers are examining all options to rein in medical costs while still offering competitive benefit packages to attract and retain employees in a tightening labor market.

With the Cadillac tax due to take effect in 2018, employers are expected to turn to newer cost-control tactics, said James W. Durkin, Jr., president of Gallagher Benefit Services, Inc. One strategy is to use higher deductibles. This year, in-network family plan deductibles average $3,000 while out-of-network deductibles average $4,500. Annual deductibles for employee-only in-network plans average $1,200, and out-of-network deductibles  average of $2,000.

Among all employer respondents, 42% have at least one wellness program in place. This figure rises to 70% for employers with at least 1,000 employees. But employee participation remains a concern according to 72% of employers that offer wellness programs. The survey uncovered gaps in financial protection benefits.

Young Men Saw Steep Premium Increases in 2014

Premiums for ACA plans increased an average of 78% for 23 year-old men and nearly 45% for 23-year-old women in 2014. HealthPocket compared the Obamacare market to the 2013 pre-reform market. Premiums increased 73% for 30-year-old men and 35% for 30-year-old women. Many young people don’t qualify for subsidies because the premium does not reach the percentage of income needed to trigger a subsidy. Premiums increased 37.5% for 63 year-old women and 22.7% for 63 year-old men. Kev Coleman, head of Research & Data at HealthPocket said, “The market trend we observed was an increase in average premium; this increase may have been obscured…by the fact that the first Affordable Care Act health plans were new and had no history against which to declare a rate increase within their state filing.” Some people get subsidies under the Affordable Care Act while others avoid a premium rate-up or rejection due to an expensive pre-existing condition, he added. For more information, visitwww.HealthPocket.com.

Premium Increases Are Decelerating

Since 2010, average monthly health plan premiums have increased 15% to $870. However, the rate of increase has decelerated after a sharp increase of 6.9% from 2010 to 2011, according to a report by ADP. Premiums rose just 1.7% from 2013 to 2014. Health plan premiums rose for employees of all ages over the period 2010 to 2014. “It’s no secret that employers are looking for ways to reduce health benefit costs while still offering effective coverage options,” said David Marini of ADP. To reduce costs, employers may change the health plan premium tiers or levels of coverage, or they may reduce their contribution to the coverage of dependents.”
The employers’ share of contributions to health premiums declined slightly for all groups from 2010 to 2014, regardless of age or number of dependents. The largest decrease was 1.5% for those with dependents. For those with no dependents, the decrease was 1%. Employer contributions decreased across all age groups. The study also finds the following from 2010 to 2014:
• Overall participation is steady, but varies with age. The percentage of full-time employees who were eligible for employer-provided health benefits remained relatively steady at 90%. The percentage of those participating in health benefits also remained relatively constant at 68%. However, the averages do not reflect the marked variances among specific age groups. Participation rose among Baby Boomers as they continue to work into their later years, and participation declined among younger employees.
• Employees 50 to 59 participated in the largest percentage, with 73% of those eligible participating. In all groups 40 and older, participation was over 70% in 2014. In comparison, among employees under age 30, just over half participated in their employer’s health benefits program in 2014. In this group the take rate declined 7.6% between 2010 and 2014.
For more information, visit www.adp.com.

Last Updated 05/25/2022

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