Employers and individuals across the country are bracing themselves for the next set of Obamacare premium rate hikes, as recent projections have revealed that premiums could be set to increase by up to 30% or more in some states.
California-based healthcare care giant, Kaiser Permanente, is trying to boost premiums by more than 37%, on average. New York insurers are requesting to increase rates by 24% on average, carriers in Washington state are asking for a 19% average premium increase and CareFirst in Maryland is looking to get an 18.5% rate bump on HMO plans and a 91% increase for PPO policies. More rate proposals will be filed in the coming weeks. All rate proposals will need to be reviewed by regulators and could be changed significantly before being finalized.
Insurers are citing two main reasons for their requests to increase premiums:
- Elimination of the individual mandate penalty.
The penalty for the individual mandate previously required Americans pay a penalty for not having healthcare coverage. The mandate itself was not eliminated, but the penalty was reduced to zero. This means that healthier people will likely opt out of continuing to pay for health insurance, leaving insurers to have to raise their premiums in order to continue covering the remaining customer base. - An expected expansion of two types of health plans by the current administration.
The Trump administration’s health plan expansions are supposed to be economical alternatives to Obamacare plans, but insurers are concerned about stability. The executive order, which was issued last year, directs federal agencies to make it easier for consumers to buy two different types of health plans. One allows small businesses to join together to purchase coverage through association health plans and the other reverses previous restrictions on short-term health plans and makes it easier for individuals to purchase them. Both of these options are expected to have lower premiums, but less benefits, making them an ideal investment for healthier individuals who don’t feel the need for comprehensive coverage.
What Does This Mean for Employers?
The 2019 premiums will be finalized in September, and open enrollment will begin November 1st. Employers may need to be prepared for increased benefits administration activity as workers navigate the premium increases and other changes to the health care landscape. The nonpartisan Congressional Budget Office estimates that approximately four million individuals will drop out of the health insurance market in 2019 due, in part, to the elimination of the individual mandate penalty. Many employers will see fewer health plan enrollees, but as long as the employer mandate remains, employers with 50 or more workers still need to offer coverage that meets the minimum standards in order to avoid penalties.
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