Rising Costs and Falling Enrollment in Affordable Care Act Marketplaces
TL/DR –
Health insurance through the Affordable Care Act marketplaces is becoming increasingly expensive due to higher premiums and fewer sign-ups. The situation has been exacerbated by the non-renewal of enhanced subsidies by the Trump administration, leading to a drop in coverage. Increased costs have also led to insurance companies such as CVS and Cigna pulling out of the marketplace, affecting hundreds of thousands of people.
Affordable Care Act Insurance Marketplace: A Rising Cost and Dwindling Enrollment
Health insurance through the Affordable Care Act (ACA) marketplaces has seen a significant increase in premiums, making it more expensive than ever before. This increase alongside a decrease in enrollees, has resulted in a pricier, more complex and frustrating ACA insurance marketplace. Forbes Senior Healthcare Contributor, Bruce Japsen, sheds some light on how we arrived at this situation.
Just a year ago, high numbers of people were enrolling in insurance on the marketplace. The initial enrollment in ACA, which provided individual coverage for those who didn’t have insurance or left their jobs, was about 8 million. Subsidies were provided based on income, which encouraged more people to sign up. The peak of its popularity saw the enrolment reach 24 million last year.
However, the non-renewal of enhanced subsidies by the Republican Congress and Trump administration led to a drop in coverage. Health insurance companies reported that enrollment in ACA is down by several million people in their first quarter earnings.
Many insurance companies anticipated these enhanced subsidies and expanded to more parts of the country. With the subsidy withdrawal, competition lessened and enrollment decreased. People are now faced with significant out-of-pocket premium increases, as predicted by KFF (formerly known as the Kaiser Family Foundation) and other groups. Some even decided to not purchase insurance due to affordability issues.
A number of insurance companies have withdrawn from the marketplace including Aetna, a subsidiary of CVS, and Cigna. This withdrawal leaves hundreds of thousands of people to find a new plan. The full extent of this won’t be understood until late summer or early fall as other companies might also exit the marketplace.
The implications of this are far-reaching. Even those who do not get their insurance on the marketplace are affected as health insurance costs continue to rise. It’s not uncommon to see an increase in the cost by 9% or 10%. This significant increase is partly due to people avoiding care during the pandemic, leading to an influx of patients now and causing higher costs for insurance companies.
This situation is impacting consumers severely. Premiums are increasing, potentially wiping out any raises in income while inflation and gas prices are also on the rise. This is not a small issue, as it’s likely affecting millions of people.
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