Your Premiums Can Be Huge Next Year, and Here’s Why
This week, the White House announced that the government will indeed make the necessary payments to health insurance companies this month . We kind of dodged the bullet because those CSRs directly affect the price of your insurance if you buy a custom plan. But the threat is only temporarily put on hold and your premiums may rise next year.
What are CSR payments?
The Affordable Care Act created a system in which the government helps people on low incomes pay for insurance. Expanding Medicaid was one way. Two other types of payments help people who purchase insurance from the individual market:
- Premium Tax Credits are provided to you, the consumer, to lower your monthly payment.
- Cost – sharing reduction (CSR) payments go to insurance companies, and in return the insurer offers you a plan with lower co-payments and deductibles.
I know, I know you already think your premiums and deductions are too high. But without these subsidies, they would have been even higher.
What happens without CSR payments?
Without payments, insurers would have to increase premiums to be able to offer the same plan with the same premiums and deductibles. So that means more expensive insurance for you. Or, if you are eligible for tax credits, your premiums will remain the same because the government pays the difference. (Remember, despite all the attempts to pass the Trumpcare bill , the ACA is still in effect for the foreseeable future.)
But our president has repeatedly threatened not to pay CSRs, implying that insurance markets would “collapse” without them, and the resulting chaos will break the deadlock in Congress.
Your insurance rates for this year have already been fixed, but what happens in 2018? Insurance companies have to request rate hikes from regulators, and they have resorted to some rather large numbers to account for the uncertainty over whether CSRs will be paid. One analyst who ran the numbers called it a “Trump tax” and broke up the requested increase as follows:
What’s going on now?
The Trump administration has agreed to pay the August CSR payments, so nothing bad will happen today or tomorrow. But we don’t have any promises yet as to whether they’ll pay CSR in 2018, and that’s still an issue as you budget for insurance next year. Remember, the rates are always going up, no matter which law is included, because healthcare is getting more expensive all the time, and we have no checks and balances about it. But without the CSR, those high numbers would get even higher.
The Congressional Budget Office this week released an estimate of what would happen if CSRs were not paid in 2018. For example, Silver plans will be 20 percent more expensive than if payments were left in place. Sarah Cliff, one of the best of those for whom should follow if you want to keep track of this soap opera, he explains in the Vox :
CBO does not think the market will fall apart if these payments are suspended. Instead, it will hobble around due to higher prices and less competition. And, oddly enough, the move will actually cost the government $ 194 billion over the next decade.
… [Report] reveals that there really is no benefit to ending the cost-sharing subsidies.
Insurers have until September 6th to finalize their rates for next year, and there are many other dramatic events and timelines that will fill you with thrill and anticipation as you wait to see if you can afford insurance next year. Enjoy!