Premiums are ratcheting up, up up like a roller coaster, but without any drops.
We read in the news every day that America’s healthcare crisis endangers people’s lives. Stories about people avoiding going to the doctor, cutting pills in half, buying insulin on the illegal market, waiting in the hospital parking lot to see if they avoid an ER visit, begging bystanders to not call the ambulance, losing insurance due to divorce or job loss. Americans are walking the tightrope between staying alive and staying financially solvent.
We know that many of us fear an immediate financial threat. But what about the long-term impact on inter-generational financial stability and prosperity due to the cost of the insurance?
Part One of this two-part series explores the impact of the increases that have happened in the individual market in Washington state since the inception of the Affordable Care Act in 2014, including a second round of Trump Shock to health care costs expected in 2020. Part Two will examine the economic realities families face, and *spoiler alert* we learn that if the premium increases continue, it won’t be long until ACA health care coverage will be unaffordable.
Part One - The Low Down On Premium Increases
Six Years of Premium Increases
When the ACA came along it was in the nick of time. In 2013, insurance for a family of 4 could exceed a Seattle mortgage. The ACA definitely brought relief and health insurance became affordable for millions of Americans. But since then, these annual increases have added up.
Earlier this spring, the Washington Office of the Insurance Commissioner announced that thirteen health insurers filed a record-low average proposed rate increase of less than 1% for the 2020 individual health insurance market.
That’s the lowest premium increase since the inception of the Affordable Health Care Act (ACA) and the Washington Health Benefits Exchange. While this is cause for celebration, it comes after several years of eye popping rate increases1:
★ 2017: 13.6% increase
★ 2018: 36.4% increase, called the Trump Shock, was in anticipation of the chaos unleashed on the health insurance market by the GOP’s determination to dismantle the ACA without a replacement plan
★ 2019: 13.8% increase
Trump Shock Round Two is Coming in 2020
Rule Changes will Raise ACA Premiums by More Than One Month's Payment. Thank goodness, the insurance companies requested an unusually low premium increase for 2020, because last April, the Trump administration announced that it will raise premiums and out of pocket expenses for 7.3 million people on ACA healthcare in 2020. That’s an additional $2,004/year for premiums for a family earning the median income -- and that’s on top of the nearly 1% increase insurers requested. Brace yourselves: the Trump Administration estimates that this increase in premium burden will cause 70,000 people a year to be priced out of health insurance.
On top of that, even people with employer insurance will feel the sting of Trump's rule changes. The rules will increase the limits on out of pocket expenses. Now everyone will be paying more for health care.
A Closer Look at the Premium Increases
This news caused us to wonder: what is the impact of premium increases on Washingtonians buying insurance from the individual market?
Let’s take a closer look at the Premium Increases since 2014 when the ACA began using the 2014 annual premium rates for a Regence BlueShield 2014 Direct Silver Rates2 for a 40 year old person, a 50 year old, and a family of four. Then, let’s apply the annual average rate increase for Washington state individual premium rates for each year.
Figure 2. Premium Increases in the Individual Market, 2014-2020
Since the ACA began seven ago, premiums will have increased 47% in Washington state by 2020 and are nearly back to pre-ACA levels -- but with higher deductibles and co-pays. And that is before the Trump Shock Round 2 expected in 2020.
★ The premiums for the 40 year old would have cost $36,647 over seven years.
★ The premiums for the 50 year old would have cost $62,823 during that time.
★ The family of four would have cost over $110,000 in premiums alone.
★ With the Trump Shock, the additional $2004 for ACA premiums for a family of 4 would mean an actual premium increase of 9% in 2020, bringing the total premium increase to 54%.
Even though insured, families face a lot of financial risk. None of these insurance plans include dental, vision or hearing costs or cost-sharing expenses like co-pays, deductibles and coinsurance. Bear in mind, that for Silver Plans, families are on the hook for 30% of In Network costs -- that's up to $15,800 before the insurance company pays the allowed amount for a covered benefit. And of course families are responsible for 100% of Out of Network costs.3
Health Insurance is a huge burden for families already struggling. It is money that didn't go towards their own retirement, helping aging parents, saving for children's college, down payment for a house and other factors that drive inter-generational financial stability and prosperity. That's a lot of money that gets extracted from their paychecks and goes -- to be blunt -- to enriching insurance companies, among others.
The need for high quality, sustainable, affordable, publicly financed and publicly administered health care for all Washington residents could not be more urgent!
Next Up in Part 2: We dig Into the economic realities and ask -- if these premium increases continue, will families be able to afford health insurance?
1.Premium Increases in the Individual Market
As reported by Kaiser Family Foundation based on benchmark Silver Plan for Washington state and https://www.healthinsurance.org/washington-state-health-insurance-exchange/ - scroll down to “Rate changes in Washington’s exchange in previous years” section:
2015: Washington Healthplanfinder’s rates increase by an average of just 1.9 percent for 2015.
2016: The average rate increase for 2016 was 4.2 percent.
2017: The average premium increase in the individual market in Washington was 13.6 percent. Premera had the largest segment of Washington Healthplanfinder market share in 2016, at 22 percent. And their approved rate increase for 2017 was the highest of any of the state’s plans, at 18.9 percent.
2018: In September 2017, Washington Healthplanfinder announced that the exchange had finished certifying plans for 2018, with an average rate increase of 24 percent for plans sold in the exchange. Ultimately, the Trump Administration announced just two weeks later, on October 12, that CSR funding would end immediately. At that point, Washington regulators had to switch to the backup rates, and they announced on October 26 that the higher rates for on-exchange silver plans had been finalized, driving the overall average rate increase up to 36.4 percent.
2019:13.8% as reported in section “14% average 2019 rate increase for on-exchange plans.”
2. The full name of the plan is: Regence BlueShield 2014 Direct Silver Rates for Non-Tobacco King County Residents. Regence BlueShield is no longer offering plans on the Washington Health Benefits Exchange.