October 18, 2018
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Obamacare’s rising premiums will hurt the middle class the most

Gabor Degre | BDN
Gabor Degre | BDN
Enrollment opens Nov. 1 and runs through Dec. 15 for individual health insurance plans subsidized through the Affordable Care Act.

For some lower-income people in the Affordable Care Act, the rising premiums President Donald Trump has talked so much about will barely be felt at all. Others, particularly those with higher incomes, will feel the sharp increases with insurance sign-ups beginning Wednesday.

Richard Taylor is one of the people on the wrong end. The 61-year-old, self-employed Oklahoman has meticulously tracked his medical costs since 1994. In 2013, he signed up for an Affordable Care Act plan for the law’s first year offering coverage to millions of Americans.

Four years ago, annual premiums for a mid-level “silver” plan to cover his family totaled $10,072.44. For 2017, they were $21,392.40 — up 112 percent.

“This is crazy. This is absolutely crazy,” Taylor said. “All I’m waiting on is to get on Medicare.”

The Affordable Care Act’s marketplaces are facing their toughest year yet, following Congress’s failed attempts to repeal the health law and Trump’s efforts to roll back or destabilize it through executive action. Health insurers have said those moves are causing premiums to rise for next year. Yet, many people won’t feel the increases.

About 80 percent of enrollees who pick plans on HealthCare.gov will be able to get insurance for $75 a month or less, up from 71 percent for this year, according to a report from the Department of Health and Human Services. The subsidies are available to people making as much as four times the poverty level, or $98,400 for a family of four, though the most generous help goes to people with lower incomes.

But higher earners like Taylor don’t benefit. He makes just short of six figures, so he doesn’t receive subsidies to help with premiums. He also has a $5,000-per-person deductible as part of the coverage he does have. “My accountant asked me what happened,” Taylor said. “I said ‘Obamacare,’ and she understood.”

For people who don’t get subsidies, “you’re looking at eye-popping rates, almost across the board really,” said Nick Gerhart, a former Iowa insurance regulator. “You’re going to have a lot of rate shock.”

Enrollment for next year is expected to fall, according to an estimate by S&P Global Ratings. The firm predicts that 2018 participation in the Affordable Care Act’s individual market will be 7 percent to 13 percent lower than for 2017, because of higher premiums, uncertainty in the marketplace and cuts to spending on enrollment advertising.

David Marcus, owner of David A. Marcus & Associates Inc., a financial advisory firm in Deerfield, Illinois, said his insurance clients -even ones with a family of four and a six-figure income-have become more likely to take the risk of not having health coverage to salvage their balance sheets. “I have a lot of middle-class people walking out with no insurance,” he said. “And they’re playing with fire.”

While monthly premiums vary widely among states, the average silver plan will cost $743 next year for an individual, up from $554 in 2017, according to the consulting firm Avalere. Prices for silver plans are rising more than those for other types of Affordable Care Act coverage, because of a move by the Trump administration to cut off payments to health insurers, known as “cost-sharing reductions.” Those funds reimburse insurers for offering reduced deductibles and copays to low-income customers, which are only available on silver-level plans.

When the Affordable Care Act was passed, Marcus said his clients who had pre-existing conditions and previously couldn’t afford insurance were “very happy because they got the Rolls-Royce plan for 100 bucks.” He said for those without subsidies to cover rising premiums, the plans’ costs have become unmanageable. “The only people who are happy” now are those receiving subsidies, he said.

Some middle-income people will be able to opt out of the program because of the premium increases. Individuals can avoid buying insurance and not pay a tax penalty, if the cheapest low-level bronze plan that’s available to them costs more than about 8 percent of their income. The Affordable Care Act made other significant changes to the way individuals buy health insurance that have benefited many, despite the increased costs. For example, it lets people who have a pre-existing condition buy coverage at the same rates as everyone else.

That’s a big deal to Rosemary Dixon, a 59-year-old from Prescott, Arizona. She’s a supporter of the law, and works with a group called Indivisible that encourages others to sign up. She signed up for a silver plan for 2014 and now pays less than a dollar a month in premiums because of subsidies, though she still has a $13,000 deductible for a plan that covers her and her husband. Her premiums would be $2,600 a month without subsidies.

Dixon said she’s terrified to not have insurance. She was diagnosed with a rare autoimmune condition in 2012 and got a kidney transplant in 2015. She’s still paying off hospital bills for transplant costs her insurance didn’t cover, and the debt is growing because they don’t make enough to cover all the costs of her continued treatments. Her drugs to keep her new kidney functioning cost about $10,000 a month, meaning that she quickly reaches her plan’s limit on out-of-pocket spending.

“If you don’t have health insurance, you’re sunk in America,” she said. “You’re just sunk.”

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