Premiums for 2019 Silver Plans Halt Upward March, CMS Says

CMS said Thursday that the average 2019 premium charged for the silver level of health insurance in the exchanges set up by the Affordable Care Act (ACA) dropped slightly for the first time since 2014, and Seema Verma, who heads CMS, credited the actions of the Trump administration for the lower premiums.

“The rhetoric out there on the exchanges does not always match the facts,” she said on a press call with reporters, saying later that the lowered average premiums are “proof” that critics of the president's policies are wrong.

Average premiums for the second lowest-cost silver plans for the 2019 coverage year will drop by 1.5%, and some states had double-digit percentage decreases.

One health policy expert offered a different explanation of the administration’s interpretation.

“I do think there is positive news in the market for consumers this year,” said Katherine Hempstead, PhD, a senior policy advisor at the Robert Wood Johnson Foundation. However, she added, that was because premiums soared so much in the previous year, driven by instability in the market amid the president’s decision to end cost-sharing reduction (CSR) subsidies in October 2017, which helped insurers keep premiums down for low-income people, as well as repeated threats to repeal the ACA.

As a result of the administration’s CSR decision, a “silver loading” phenomenon developed, where state regulators loaded the effects of the lost subsidies onto the silver plans, driving up their cost for Americans who don’t qualify for premium tax credits.

Because these credits are calculated as a percentage of premium costs, rising premiums meant rising credits, too. As a result, some premiums for gold plans will cost less than some silver plans, and some bronze plans were essentially free for those at the lowest income levels.

Hempstead said some carriers raised prices extensively and figured out how to make money. Last week, the Henry J. Kaiser Family Foundation released a brief that noted that insurers were returning to levels of profitability not seen since before the ACA took effect.

While Verma said Thursday’s news proves their actions are working to bring down health insurance prices, Hempstead said it would be more accurate to say that average premiums stopped rising “despite all of the actions” by the administration in the past year.

In her announcement, Verma cited CMS data showing that average individual market premiums more than doubled from $2784 per year in 2013 to $5712 in 2017, an increase of $105 percent. In the 39 states using the federal exchange, the average premium for the second-lowest cost silver plan increased by 37% between 2017 and 2018. Between 2016 and 2017, the hike in average premiums was 25%.

Verma also cited insurers dropping out of the exchanges between 2016 and 2017, leaving some counties with just 1 insurer to choose from. But they are starting to return, and said the number of counties with only 1 insurer will drop from 56% this year to 39% in 2019. Also, 4 states will have only 1 insurer next year, compared to 10 in 2018.

The CMS administrator also cited the positive effect of association health plans and short-term, limited duration health plans, although the effect of those plans, which are not compliant with such things as essential health benefits or a prohibition on discrimination because of pre-existing health conditions, have yet to fully roll out or take effect.

Verma said the achievements were brought about not by “penalizing people for buying overpriced coverage they don’t want and can’t afford but by opening up more choices for affordable coverage, including short-term health plans and association health plans.”

Some states will have large decreases, such as some states that pursued and were granted section 1332 waivers to establish reinsurance plans to help keep premium costs stable. Hempstead cited the reinsurance waivers as a positive benefit for consumers.