Study Finds Republican Health Proposals Would Increase Premiums

As Congressional Republicans try to replace the Affordable Care Act, California is trying to figure out how its own exchange could be impacted.

A new analysis funded by Covered California finds eliminating individual mandate penalties and one of the Affordable Care Act's key subsidies would increase premiums by up to 49 percent next year.

Peter Lee, Executive Director of Covered California, says these changes would be a setback for California's insurance market.

"Changes in federal policy would pull the rug out from under what has been working, and working better year over year, over the last four years," Lee says. 

The two measures have been floated by either Congressional Republicans or President Donald Trump.

The current Republican-sponsored health care bill calls for eliminating the individual mandate rule that requires fines to be imposed on people for being uninsured.

Instead, insurers would charge higher rates to people who have not been covered for 12 months or longer.

The fines are intended to encourage more healthy people to get insured and paying into the system.

Covered California says without the fines, up to 350,000 Californians who would otherwise get coverage would likely go uninsured. This in turn would cause premiums to rise by 24 percent.

The other policy involves an Obamacare subsidy for the poor known as a Cost Share Reduction.

Congressional budget negotiations almost came to a halt recently when President Trump threatened to stop funding the subsidy unless Democrats agreed to fund the border wall. Trump has since backed off of his demand. But Lee says there is still uncertainty surrounding the subsidies.

Lee says their study shows insurance companies would raise some premiums by 11 percent if CSRs are not funded.

"Funding the CSRs is the right thing to do,” Lee says. “They help low-income consumers afford health care. And they allow the federal government pay less."

A Kaiser Family Foundation analysis found that getting rid of CSRs would actually cost the federal government more money, because premiums would rise and it would have to pay higher tax credits to consumers. The analysis says the added cost would total $2.3 billion.

Lee says he has received confirmation from several major insurers that they will continue coverage in California into 2018, regardless of federal policy changes. He worries other states with fewer insurance companies in their marketplaces may not be so lucky.