Though insurers have not yet unveiled premium rates for the 2018 ACA exchange, analysts trying to make sense of the latest health care changes predict increases in premiums could have moderate- and low-income consumers actually coming out ahead, according to the Associated Press.
It seems counterintuitive, but Obamacare is a complicated balancing act, and removing a weight in one area is going to trigger a counter-balance in others. In this case, of the four tiers of plans offered on the ACA market — platinum, gold, silver and bronze — the silver-level plans are the only tier that benefits from cost-sharing reduction subsidies, but the adjustments built into the Obamacare model could lead all levels to benefit.
The subsidies taken out of play by the president’s executive order are one of two key subsidies created by Obamacare. The CSRs discontinued by the president’s executive order are paid to insurers to keep deductibles and copays lower. To cover the increased expense caused by the loss of these CSRs, insurers will likely increase premiums on silver-level plans — in California, the increase is expected to be nearly 25 percent, according to Modern Healthcare.
This increase, however, will trigger the second subsidy, a tax credit given to consumers to cover premiums, to increase.
"This is where the counting gets sort of weird," said Matthew Buettgens, a senior research analyst with the Urban Institute.
The tax credit for premiums at all levels is set based on the cost of silver plans. Thus, premiums for gold- and bronze-level plans could see no significant increase, but the tax credit afforded to consumers would equate to a lower cost overall. Bronze plans would be significantly less expensive, even free, and gold plans would become more affordable.
“It means many more Californians and people across the country will get a zero-premium bronze plan," says Peter Lee, executive director of Covered California. Other states where consumers could see zero-premium bronze plans include Florida, Georgia, Illinois, Mississippi, Pennsylvania, Utah and Wyoming.
Given a greater tax credit incentive, Urban Institute predicts 600,000 more low- to moderate income earners would be drawn to the ACA exchanges.
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Emily Payne
Emily Payne is director, content analytics for ALM's Business & Finance Markets and former managing editor for BenefitsPRO. A Wisconsin native, she has spent the past decade writing and editing for various athletic and fitness publications. She holds an English degree and Business certificate from the University of Wisconsin.
