If premiums for Nevadans covered by the Affordable Care Act increase substantially next year, most will still be able to get coverage for $100 a month or less because of a built-in buffer against insurance rate hikes written into the law, federal health officials said Wednesday.
A new analysis by U.S. Department of Health and Human Services looked at how premium increases of 10, 25 and 50 percent would affect those insured through the Healthcare.gov exchange and found that bigger policy increases would actually enable more people to pay less than $100 a month by expanding the availability of tax credits.
U.S. Department of Health and Human Services officials, who briefed reporters on the analysis Wednesday morning in a conference call, said they hope to defuse fears among the nearly 13 million people who signed up for so-called Obamacare marketplace policies in 2016 when they hear about upcoming increases in insurance premiums.
“Headline rate increases do not reflect what consumers actually pay,” said Katie Martin, HHS acting assistant secretary for planning and evaluation.
Average overall premiums for 2017 in Nevada are expected to increase between 7.95 and 16.99 percent, according to the Nevada Division of Insurance.
Counterintuitively, the HHS analysis shows that a higher average premium increase would enable more Nevadans to keep their monthly payments under $100 for so-called Obamacare insurance.
With a 10 percent increase in premiums, for example, 71 percent of Nevadans with insurance through Healthcare.gov could obtain coverage for $75 or less and 77 percent could obtain it for $100 or less in 2017, according to the analysis. Those figures would both be slightly higher than the 2016 rates of 69 percent and 78 percent, respectively.
And if insurers increased premiums by a whopping 50 percent — strictly a hypothetical, the officials assured — those numbers would jump to 78 percent and 82 percent, up from 69 percent and 76 percent in 2016, it said.
The Silver State Health Insurance Exchange, which operates the Nevada Health Link online marketplace, enrolled more than 88,000 people during 2016 open enrollment.
The reason for potential increased participation is the advance tax credits included in the Affordable Care Act to subsidize health insurance for the majority of consumers who have plans through Healthcare.gov.
The law bases eligibility for tax credits on the share of a household’s income expected to go toward coverage under what’s known as a benchmark plan. When premiums increase, a mechanism in the law adjusts the formula so that more people may become eligible for the tax credits, the HHS officials said.
Since Healthcare.gov customers often select plans with less coverage and lower premiums than the benchmark plan, some could actually see the cost of their monthly premiums decline despite a rate increase, the officials said.
The health department officials didn’t comment in detail on the impact of the premium rate hikes on those who seek insurance outside of the health care exchanges or wouldn’t qualify for tax credits.
UnitedHealth Group, Nevada’s largest insurer, declined to comment on the report.
Greg Lemon, spokesman for outspoken ACA critic Rep. Joe Heck, R-Nev., said the HHS analysis was putting a positive slant on a flawed program.
“While it’s good Nevadans will still be able to access insurance, the ACA has fallen well short of its stated goals. The law has not done nearly enough to expand access to health care, reduce costs, or increase healthcare choices for many Nevadans,” he said.
The health department report, released months before open enrollment begins on Nov. 1, comes amid concerns over potential premium increases and the departure of major insurers including Aetna and UnitedHealth Group from some Obamacare marketplaces.
Though Nevada lost its nonprofit insurance carrier created by the ACA last year, it hasn’t been affected by the recent withdrawals of major insurers from state insurance exchanges.
Aetna did not offer plans in Nevada’s Obamacare market, and UnitedHealth Group chose Nevada as one of a handful of markets in which it would maintain its Obamacare presence.
In Nevada, insurers like UnitedHealth Group that provide Nevada with Medicaid managed care services must also provide at least one “silver-level” qualified health plan on the Obamacare exchange, said Janel Davis, a representative of the Silver State Health Insurance Exchange.