By John Tozzi
Like many Americans, Diane Torpin is bracing to pay more for health insurance next year. Premiums for her Affordable Care Act plan will jump 11%, to $1,224 a month, with a $6,300 deductible.
The increase isn't going to break the bank. But health expenses have forced 62-year-old Torpin, who works part-time in a retail pharmacy in Lake Tahoe, Calif., to make some painful budgetary choices. She and her husband, Tim, who is 66 and gets his coverage through Medicare, have pushed off vacation travel and plans to buy a second car. "I'm so confused about why health care that covers so little costs so much," Torpin says.
She's not the only one. The Affordable Care Act marketplaces in most states opened Friday, and overall prices for 2020 are largely stable compared to steep annual hikes that occurred in recent years. But stable doesn't mean cheap.
The price of coverage continues to stretch the limit of what many people who don't receive federal subsidies are willing to pay. A typical premium on Healthcare.gov for a 27-year-old for a midlevel plan is $388 per month, or $1,520 for a family of four, according to the Centers for Medicare and Medicaid Services, the agency that administers the ACA markets.
For the 38 states that use the Healthcare.gov marketplace, premiums will decline by 4%, compared to the current year, the agency said.
Whether any individual customer pays more, less, or a similar price in 2020 will depend on where they live, how much they make, and the mix of plans in their market. "Not everyone's a winner," said David Anderson, research associate at the Duke Margolis Center for Health Policy.
As premiums increased in recent years, the number of people buying health insurance coverage in the individual market sank from a recent peak of about 17 million in 2015 to 14 million last year, according to data compiled by the Kaiser Family Foundation. Most of the customers on the ACA exchanges received subsidies that insulated them from price hikes, while most of those who left the market did not.
"The challenge there is affordability," said Lisa Lough, general manager of Cigna Corp.'s individual and family plan business. The company is expanding its ACA offerings in 2020. "Part of it's just the nature of the beast in terms of where the pricing is today."
That's a consequence of politics as much as market dynamics. Congress briefly considered a plan to stabilize the "Obamacare" markets and bring down prices in 2017 and 2018, but those efforts stalled. Now the Trump administration and a group of Republican-controlled states led by Texas are asking courts to rule the entire law unconstitutional. Democrats competing for their party's presidential nod are split over whether to push for a single-payer public health system or build on the law's private marketplaces.
With no help coming from Washington, some states have taken matters into their own hands. California is extending subsidies to people with higher incomes. Colorado, Delaware, Montana, North Dakota, and Rhode Island have created new re-insurance programs to insulate health plans from high-cost claims, following other states that started similar programs in the last two years. Such policies typically reduce premiums by about 17% in their first year, according to research by consultant Avalere Health.
In Colorado, premiums for individual health plans will drop on average by 20%, the state says. That's relief to Jo Anne McClung, who runs a nonprofit pre-school in Dillon, Colo. "I've been here for 12 years and rates were just going up and up," she said.
McClung expects to see lower premiums for her small group health plan, which covers about half a dozen of her employees. In addition to Colorado's re-insurance program, her county launched an innovative purchasing coalition to negotiate better prices from hospitals and insurers. "I'd be able to put that money directly back into teachers' paychecks," McClung said of the savings.
Competition is expanding as well. "A second year of declining premiums and expanding choice is proof that our actions to promote more stability are working," CMS Administrator Seema Verma said in a press release Oct. 22.
While many large established health plans have pulled back from the ACA markets, New York-based Oscar has focused on them. Backed by $1.2 billion from investors including Alphabet Inc.'s venture arm, the company is expanding its offerings to six new states in 2020, including markets in Colorado, Virginia, Pennsylvania and Georgia.
"We had to, like the rest of the market, go through the baptism by fire in 2016 and '17," Oscar Chief Executive Mario Schlosser said. Medical losses spiked and political uncertainty over the ACA's future caused insurers to raise premiums or exit the market entirely. "It's not an easy market to be in," Schlosser said.