September 14, 2017
WASHINGTON — Average premiums for individually purchased health insurance will grow around 15 percent next year, largely because of marketplace nervousness over whether President Donald Trump will block federal subsidies to insurers, Congress' nonpartisan fiscal analyst projected Thursday.
The Congressional Budget Office estimate comes as Trump has repeatedly threatened to halt the payments in his drive to dismember President Barack Obama's health care law.
The agency said 2018 premiums will grow "largely because of short-term market uncertainty — in particular, insurers' uncertainty about whether federal funding for certain subsidies that are currently available will continue to be provided."
It also attributed the projected increase to growing numbers of people living in regions where only one insurer sells policies, therefore facing less competition.
Obama's law requires insurers to reduce out-of-pocket costs like deductibles for lower-earning customers, and mandates that the government reimburse the companies. It costs the government about $7 billion annually.
A federal court has ruled Congress didn't authorize the expenditures, but the subsidies have until now continued.
White House spokesman Ninio Fetalvo accused the budget office of issuing analyses that "have been off base for years."
Fetalvo said while the administration considers whether to continue the payments, "real reform which lowers costs and expands choices will only come from repealing and replacing Obamacare."
The budget agency has a sterling reputation with most objective, outside fiscal experts. The GOP effort to erase Obama's law failed in the Senate in July, and a renewed effort by some Republican senators to scuttle the law is considered unlikely to succeed.
Continuing the federal subsidies "remains essential to the stability of the individual market," said Kristine Grow, a spokeswoman for America's Health Insurance Plans, that industry's largest trade group.
The budget office and insurance industry had previously projected that 2018 premiums would grow an average 20 percent if Trump actually halts the subsidies.
Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., have been trying to craft an agreement continuing the payments for at least a year. In exchange, Alexander wants Democrats to make it easier for states to relax the Obama law's coverage requirements, which Democrats are resisting.
The report said it expects the 10 million Americans buying coverage on government-operated insurance exchanges this year to grow to 11 million in 2018.
But it said that increase would be constrained by rising premiums plus steps the Trump administration has taken, such as cutting outreach programs that publicize the exchanges and reducing the previous 90-day enrollment period to 45 days.
Of the 10 million people buying coverage on insurance exchanges, 8 million qualify for federal premium subsidies. Those subsidies rise automatically with premiums, so those customers would largely be protected as premiums grow.
But 2 million people buying coverage on exchanges who don't get those subsidies, and 6 million others buying individual policies on their own outside the marketplaces, would not be shielded from growing premiums.
More than half of Americans get medical coverage from their employers.
AP reporter Jill Colvin contributed to this report.