Budget Office Says Health Insurance Premiums to Rise Again in 2018

There's good news and bad news in the Congressional Budget Office's analysis of the bipartisan Senate deal to save some Obamacare provisions from President Trump and his wrecking crew.

The good news is that the so-called Alexander-Murray compromise, named after its godparents, Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), would accomplish its goal of reducing premiums and would even cut the federal deficit, without raising the number of Americans without health coverage.

The bad news is that it's already too late for the measure to affect premiums for 2018. Insurers already have set their premium rates for the six-week 2018 open enrollment period that starts on Nov. 1, and the CBO says it assumes the legislation won't be enacted by then.

Even that places an optimistic spin on the measure's chances. Despite garnering bipartisan support, there are no signs it ever will be enacted at all. (We've predicted its dismal fate from the outset.) Trump has been notably unenthusiastic about Alexander-Murray, as are House Republicans.

Alexander and Murray drafted their bill to roll back some of the most damaging steps Trump has taken to undermine the Affordable Care Act system. The most crucial was his cancellation on Oct. 12 of cost-sharing reduction reimbursements to insurers. These are repayments designed to compensate insurers for reductions in deductibles and other out-of-pocket payments that the law requires them to offer their lowest-income customers. Because of doubts over whether Trump would continue to make the reimbursements, which have been under legal challenge, many insurers raised premiums for 2018 to compensate for the lost income.

A survey released Wednesday estimated that uncertainty about the cost-sharing payments alone produced premium increases averaging 20% for 2018. The estimate was made by the consulting firm Avalere Health.

Alexander and Murray would restore those reimbursements for the rest of this year and the next two years. That would allow some of the premium increases to be rolled back. The bill would require insurers to rebate some of the premium increases if the cost-sharing payments are made, but it's unclear how the money would be divided between individuals and the federal government.

Because premium subsidies paid by the government to more than 80% of customers in the individual insurance market rise as premiums increase, cutting off the cost-sharing reimbursements actually will cost the government money. CBO estimates that about $3.1 billion in rebates would be due over 10 years if the measure passes, with most of it paid in fiscal 2019.

Alexander and Murray used the CBO report to push back at Trump's incorrect assertion that the cost-sharing reimbursements are a "bailout" for insurers; the insurers are required by law to provide the out-of-pocket reductions to low-income households, and were promised the reimbursements in the Affordable Care Act.

"This nonpartisan analysis shows that our bill provides savings and ensures that funding two years of cost-sharing payments will benefit taxpayers and low-income Americans, not insurance companies," the senators said in a joint statement.

Another provision of the Alexander-Murray bill would restore $105.8 million for outreach and marketing related to Obamacare enrollments. The Trump administration eliminated those funds by cutting the marketing budget for the Department of Health and Human Services by 90%, another facet of the effort to undermine the law. Those funds would have covered marketing and information efforts that would normally have been underway for weeks; it's unlikely that restoring them even now would have an effect on open enrollment for 2018 plans. CBO didn't estimate the budgetary impact of restoring the funds because it can't assess whether increased enrollment, and therefore higher outlays for subsidies, would be counterbalanced by improvements in the overall health of the enrollment pool, which would lead to lower premiums and smaller subsidies.

Alexander-Murray also would expand the availability of high-deductible catastrophic health plans to all buyers, rather than to buyers under 30, the cutoff under the Affordable Care Act. CBO estimated that because people who enroll in catastrophic plans "tend to be healthier, on average" than other enrollees, this provision might slightly reduce overall premiums. That in turn would reduce subsidy costs to the government by a modest $1.1 billion over 10 years, the agency said.

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