This year, Utahns will be shopping for health insurance on and off the exchange. Sensational headlines and posts on social media tend to confuse the facts with political agendas. I feel it is important for those citizens to cut through the clutter and ask: what will these changes really mean for us as consumers?
President Trump signed an executive order he believes will help save a troubled marketplace for health insurance: It allows groups of small businesses to buy cheaper insurance plans that provide fewer protections. It would also expand the time frame in which people can buy short-term insurance plans, which are usually purchased as a bridge between jobs.
But the sweeping changes are likely to raise premiums for many people. Starting immediately, the administration will also stop reimbursing insurers for subsidies to offset co-payments and deductibles for low-income consumers. These Cost Sharing Reduction (CSR) subsidies were provided under the Affordable Care Act. Insurance companies still must give these subsidies to low-income customers for the rest of 2017. For 2018, insurance companies will still have to provide the same reductions in co-payments and deductibles to the consumers but, to compensate for the lack of subsidies, the insurers will be forced to raise premiums proportionately. If they didn’t, every insurance company would immediately go bankrupt.
The Utah insurance commissioner and the two insurance plans on the exchange this year, University of Utah Health Plans and Select Health, anticipated the federal government would stop reimbursing insurers for subsidies on co-payments and deductibles starting in 2018. As a result, instead of a subsidized 7 percent increase, insurance premiums are set to increase by an additional 30 percent to make up for the loss of federal funding.
However, premiums sold outside of the exchange will not experience a full 30 percent increase.
Despite the 30 percent price hike, many who had been eligible for the subsidy will not end up paying that full amount. That’s because the federal government provides a tax credit (the Advanced Premium Tax Credit) to help offset the cost of health insurance premiums.
Policy regulating our health care insurance system continues to be a work in progress, and it is imperative that Utahns arm themselves with the facts.
Chad Westover, CEO of University of Utah Health Plans
Salt Lake City