When enrollment opens next week, shoppers in the Affordable Care Act’s online insurance marketplace will see, on average, double digit increases in premiums. Subsidies will help cushion the blow for most of the 84,000 Mainers who enrolled last year, but some consumers and small businesses will have to absorb the higher costs.
For the last couple years in Maine, premium increases in the online marketplace have held relatively steady. Last year, they ranged from 0.5 percent to almost 6 percent. But this year marks a dramatic shift: Premiums will jump, on average, between 18 and 25 percent.
“Unfortunately in 2017, we are seeing pretty significant premium increases for plans on Maine’s marketplace,” says Consumers for Affordable Health Care Executive Director Emily Brostek.
That’s the bad news, but Brostek says there’s a silver lining: tax credits will cover the cost increases for most marketplace consumers.
“So for the 8 or 9 out of 10 Mainers who got financial help for the cost of their plan, they’re not going to see the same kind of increase, because their tax credit is going to protect them,” she says.
But those who earn too much to qualify for a tax credit won’t have that buffer, and Brostek says some of those consumers can barely afford their coverage currently.
The double digit premium increases are also spilling over into small group plans for businesses, says employee benefits attorney Edward Feibel of Eaton Peabody in Portland.
“Most of them, that I would say, that I’ve heard about, are running in the high teens,” he says.
And with the exception of very small businesses, which aren’t mandated to provide health insurance, there’s no tax credit to cushion the blow for employers in the small group market. They’re faced with a dilemma as they figure out how to handle the health insurance premium increase for 2017, Feibel says: absorb it, or pass it along to employees?
“Some will share the cost, they’ll share in the increase, so they will pick up a piece. I don’t think I’ve talked to anybody at all who is picking up 100 percent of the increase, it’s just not a financially viable option,” he says.
Others, Feibel says, are weighing the costs and benefits of simply paying penalties for not complying with the Affordable Care Act.
“It’s the complete opposite of what the hoped for effect of the law, requiring employers to provide coverage. The cost of coverage being what it is, small employers can’t afford to pay that much of the premium,” he says.
The driving factor behind this year’s spike in premiums, Brostek says, is that the previously uninsured and underinsured have sought more care than expected. As a result, insurance carriers have paid out higher claims than anticipated.
That’s why Maine’s only insurance co-op, Community Health Options, decided to stop accepting new enrollments during the sign up period last year, to make up for $30 million in losses.
Maine Health Access Foundation’s Morgan Hynd says overall high health care costs also fuel the higher premiums.
“That’s something that needs to continue to be addressed outside of marketplace insurance plans,” she says.
But for the near future, Hynd says consumers purchasing on the insurance marketplace should shop around to get the best deal. While some insurance carriers in other states have dropped out of the online marketplace, Maine still has three to choose from: Community Health Options, Anthem and Harvard Pilgrim Health Care.