Health Reform WK-EDGE Premiums could rise about 19% if subsidies are axed
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Friday, April 14, 2017

Premiums could rise about 19% if subsidies are axed

By Kayla R. Bryant, J.D.

If insurers stop receiving federal cost-sharing subsidies, the average premium for benchmark silver plans in the health insurance marketplace would need to rise by about 19 percent to compensate for the lost funding. The Kaiser Family Foundation (KFF) analyzed data for states using the federal marketplace in 2016 and found that non-Medicaid expansion states would likely experience higher premium increases.

Subsidies. The cost-sharing subsidies established by section 1401 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) are available for consumers purchasing marketplace plans who have incomes from 100 percent to 250 percent of the federal poverty level. However, the legality of these subsidies was challenged in court by the House of Representatives. Should the subsidies cease, insurers would need to compensate for the loss of funding.

Analysis. To account for the lost subsidies, premium increases would vary across the 38 states that used the federal marketplace in 2016, with an average increase of 19 percent. North Dakota consumers would likely see a 9 percent premium increase in silver benchmark plans, while Mississippians would be hit the hardest with a 27 percent increase. States that did not expand their Medicaid eligibility usually have higher levels of subsidies because of the increased number of marketplace enrollees with incomes between 100 and 150 percent of the poverty level (who are covered by Medicaid in expansion states). As a result, expansion states would see a smaller bump of 15 percent in premiums, while non-expansion states would experience a 21 percent bump.

Companies: Kaiser Family Foundation

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