The head of California’s health insurance marketplace waded back into the political debate over the future of Obamacare Thursday, warning that certain actions contemplated by President Trump and Congressional Republicans could cause premiums for individual plans to spike dramatically in 2018.
Covered California Executive Director Peter Lee unveiled an analysis of what would happen if the federal government chooses not to enforce the Affordable Care Act's tax penalty on people without insurance and does away with cost-sharing subsidies that lower out-of-pocket costs.
Under that scenario, insurers could respond by pushing premiums in the state up an average of 42 percent, according to the analysis by Pricewaterhouse Coopers. The study also concluded that some 340,000 Californians would drop from individual coverage in 2018.
If the Trump administration maintains the cost-sharing subsidies but chooses not to enforce the tax penalty on those without insurance, the report estimated that premiums could still rise an average of 28 percent.
"Changes in federal policy would pull the rug out from under what has been working, and working better year over year over the last four years," said Lee.
If Washington maintains the status quo, the analysis estimated that premiums in California's individual insurance market will rise an average of 9 percent for 2018 plans.
Monday marks the deadline for insurance firms to submit next year’s proposed premiums to state regulators for review.
The biggest problem for both consumers and insurers is the uncertainty Washington is creating in the health insurance market, said Lee, adding that in California that could spell higher costs for consumers, especially those who don't receive federal subsidies.
"Uncertainty is something that health plans cannot price for, won't price for, or will add to their premium harming consumers," he said. "We need more certainty."
Various experts have raised the specter of uncertainty - or cuts in federal subsidies - sparking an exodus of insurance companies from state exchanges. Eleven insurance companies offer plans on Covered California; consumers have two or more options to choose from, depending on where they live.
Lee spoke out last month when Congress was first considering the Republican-sponsored legislation that would have replaced the Affordable Care Act, warning that "millions of Californians" would lose coverage if that measure became law. Speaker of the House Paul Ryan (R-Wisconsin) pulled the bill before a scheduled vote because he did not have enough support to pass it.
The White House and Congressional Republicans have been discussing amending the bill to give states the option of seeking waivers that would allow insurers to charge higher prices to people with preexisting conditions and to reduce the number of services covered by their plans.
The legislation would also sharply cut federal support for the expansion of Medicaid, called Medi-Cal in California. The Congressional Budget Office's analysis of the first version of the bill predicted that it would cause up to 24 million Americans to lose or drop their health insurance over the next 10 years.