High premiums trigger decline in state's health insurance signups
PHOENIX — A doubling of individual health insurance premiums in Arizona for 2017 triggered a sharp decline in Affordable Care Act signups among people who don’t qualify for tax credits that offset their costs, according to a new analysis.
The review by University of Arizona health insurance expert Dr. Daniel Derksen of data released by the federal government last week shows a 23 percent decrease in enrollment by that group. Derksen’s review of analysis shows the number of people buying insurance who qualify for the tax credits rose by more than 3 percent.
Overall, Arizona saw a 3.3 percent enrollment decline in marketplace plans that are a key component of former President Barack Obama’s heath care law, to about 196,000 people.
The study comes as the Republican-led Congress is debating dramatic changes to the Obama-era law. Arizona, with its eye-popping premium increases, is one of President Donald Trump’s most cited examples as he tries to make the case that the ACA is collapsing of its own weight.
But Derksen’s research shows there are actually two simultaneous running stories about the ACA: While in Arizona some consumers who were not eligible for the law’s income-based subsidies dropped coverage in the face of rising premiums, Arizonans who do get subsidies on average saw a slight decline in what they have to pay.
Nationally, the number who chose plans during open enrollment declined about 4 percent, from 12.7 million to 12.2 million. The number of people who actually paid the premiums, however, is at least 10 percent lower.
The sharp decline in insurance purchases among higher-earning Arizonans who don’t get help paying for health insurance under Obama’s law shows the impact of the higher rates on those who don’t get subsidies, Derksen said.
“That’s the group that felt the full force of the doubling of premiums in our state,” said Derksen, a physician and director of the Arizona Center for Rural Health at the UofA College of Public Health. He helped set up New Mexico’s insurance exchange and worked on parts of Obama’s health law.
The same scenario will likely play out nationally, Derksen said, as premiums rise and the number of insurance choices declines.
The average premium in Arizona before subsidies is $611 a month, up from $324 per month last year.
Last year, 52,797 Arizonans who bought and paid for plans earned too much to get a tax subsidy. That number fell to 40,537 at the end of open enrollment on Jan. 31, and is likely to fall more because some people who chose plans won’t actually pay for them.
Nearly 80 percent of the 196,521 people who chose plans on the exchange this year in Arizona got subsidies, however. They’re paying an average of $104 per month, an actual decrease from last year’s $120 a month.
Under Obama’s law, subsidies go up when premiums rise. They phase out at 400 percent of the federal poverty level, which is just above $47,000 for an individual or $97,000 a year for a family of four.
Arizona premiums soared this year as the number of insurers serving the individual market shrank dramatically and premiums that were well below the national average rose to the 8th highest in the nation. The increased rates and a cut in insurers to just one in all but one Arizona county made Arizona a focus of Republican efforts to repeal Obama’s law.
Nationally, premiums also rose, although not as dramatically. The average cost is up by 25 percent across the 39 states that use the federal exchange to facilitate health insurance sales.
The proposal now making its way through Congress would drastically change the Affordable Care Act. In the individual marketplace, the income-based tax credits that are calculated based on premium costs and income would be replaced with flat age-based credits that will help fewer people pay for health care. Older people would pay much more, while younger people would expect lower rates.
Drastic changes are also proposed for Medicaid, which insures very low income Americans, while insurance mandates for individuals and employers would end and most of the taxes that paid for the ACA would be repealed. An analysis done by Arizona’s Medicaid agency shows more than 380,000 of 1.9 million now on the program could lose coverage by 2023
Overall, the Congressional Budget Office estimates that 24 million Americans would lose their insurance over a decade, while federal deficits went down.
Enrollment figures released by the Health and Human Services Department last week show the actual premiums people paid before tax credits was 88 percent higher more than last year in Arizona. That’s below the 116 percent average premium increase statewide, a change likely caused by how people chose their plans, Derksen said.