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Obamacare prices hiked up to 38 percent because of Trump threats: Report

  • Insurers added surcharges of between 7 and 38 percent onto Obamacare silver plans because of President Donald Trump's threats to kill reimbursement payments to health plans.
  • Many customers will be shielded from the higher prices.
  • But nonsubsidized customers could get hit with the full of effect of the raised premiums.
Donald Trump
Jabin Botsford | The Washington Post | Getty Images
Donald Trump

Insurers slapped surcharges of anywhere from 7 to 38 percent onto premiums for Obamacare's most popular type of plans because of threats for months by President Donald Trump to end reimbursement payments to insurers, a new report says.

But many customers will be shielded from those price hikes, the Kaiser Family Foundation report noted.

That's because they either will receive higher federal subsidies that offset rising Obamacare premiums, or will opt for other types of plans that are not subject to the surcharges in a number of states.

In fact, another new analysis, from consulting firm Oliver Wyman, notes that there will be more Obamacare customers in 2018 who will personally pay no money at all for their premiums because their federal subsidies will be higher than the cost of their plans.

However, some customers will get hit with the full effect of the price hikes identified by Kaiser.

The analysis by the Kaiser Family Foundation comes days before Wednesday's start of open enrollment in Obamacare plans.

And it comes two weeks after Trump followed through on his threats to cease the crucial cost-sharing reduction payments to insurers, who had anticipated the risk of that with higher prices for next year.

Kaiser's report is focused on how insurers raised prices of silver Obamacare plans above what they otherwise would have charged to account for the loss of billions of dollars in those payments.

The payments had compensated them for discounts given to low-income customers for their out-of-pocket health costs, including deductibles, copayments and coinsurance.

Silver plans, which cover about 70 percent of their customers' medical costs, are the plans of choice for more than 7 out of every 10 Obamacare customers on government-run marketplaces.

Silver plans are also the only types of plans where lower-income Obamacare customers can obtain the cost-sharing discounts if they enroll on a government exchange. Those discounts must continue to be granted by law, despite Trump's decision to cease compensating insurers for their cost.

Because of those two facts, many insurers, in order to account for the potential loss of the payments, loaded their higher premium rates only onto silver plans, and not onto other tiers of Obamacare plans.

That had the effect of shielding most of the customers from the price hikes because the vast majority of silver plan customers get premium subsidies that will increase to cover the higher prices.

On the low end were several insurers in Oregon that each added a 7.1 percent surcharge on their silver plans.

However, those extra charges were added both to plans sold on government exchanges and outside of those marketplaces.

People who buy coverage outside of the exchanges do not get federal subsidies to lower their monthly premiums.

On the high end was Meridian Health Plan in Michigan, which added a 38 percent surcharge onto silver plans sold both on and off of Obamacare exchanges.

In Pennsylvania, nine insurers will have a 34.29 percent surcharge on silver plans sold on the federal Obamacare exchange, HealthCare.gov. But there is no surcharge added onto the 2018 prices of plans those insurers will sell outside of that exchange in Pennsylvania to nonsubsidized customers.

In California, insurers who sell silver plans on the state-run Obamacare exchange will have prices that are anywhere from 8 to 27 percent higher than they otherwise would have been. But there will be no surcharge on plans sold outside of the exchange.

The segregation of where the surcharge is applied means that customers who earn too much income to qualify for subsidies that lower their monthly premiums can buy outside of the exchanges in some places to avoid much-higher premiums.

But not in all places.

In Indiana, Celtic Insurance has tacked a 16.6 percent surcharge on all "metal" tiers of Obamacare plans, leaving nonsubsidized customers with much higher bills.

Obamacare plans are ranked in ascending order of the share of medical benefits they cover, with bronze being the less comprehensive, followed by silver, gold and platinum. The more comprehensive the coverage, the higher the premiums are.

In Colorado, seven insurers are charging anywhere from 1.6 to 14 percent more than they otherwise would have across all metal tiers because of the loss of the federal payments.

Kaiser's report noted Obamacare exchange customers who earn between 250 and 400 percent of the federal poverty level "could in some cases be better off" because of the price hikes.

Those customers' incomes are low enough to qualify them for premium tax credits that reduce their monthly enrollment costs. But they earn too much to qualify for the additional subsidy that lowers their out-of-pocket health costs.

Those customers "will receive bigger premiums subsidies, and use those to pay less than they would now for a bronze plan (with higher patient cost-sharing) or a gold plan (with lower patient cost-sharing)," Kaiser's report said.

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