President Trump’s decision to cut off Obamacare payments to insurers has driven up the number of zero-cost plans being sold to customers for 2018.
The move to stop the cost-sharing reduction subsidies has led to higher tax credits for low-income customers, which in turn has led to an increase in the number of cheap Obamacare plans available for no premium but high deductibles.
The eligibility for a zero-cost plan varies depending on where an enrollee lives and how much he or she makes. For instance, 2,436 counties in the U.S. offer free bronze plans — the cheapest of Obamacare’s four metal tiers — to a 40-year-old making $20,000 a year, according to an analysis from the health research organization Kaiser Family Foundation.
A separate analysis from Kaiser found that 4.5 million uninsured people are eligible for plans with zero-dollar premiums.
“There were certainly cases previously where zero premium bronze plans were available to people receiving tax credits, but the availability has increased dramatically for 2018,” said Larry Levitt, senior vice president for Kaiser.
The website Health Sherpa, which helps people find Obamacare plans, found that in the first two weeks of open enrollment, 18 percent of all enrollees found a plan with no premiums and 51 percent found plans for $50 or less a month. Nearly 2.3 million people signed up for Obamacare in the first 18 days of open enrollment, the Trump administration said Wednesday.
Levitt attributed the boon of zero-cost plans to President Trump’s decision to halt cost-sharing reduction payments last month. The payments reimburse insurers for a requirement to lower co-pays and deductibles for low-income Obamacare customers.
Trump’s decision to halt the payments on Oct. 18 led to insurers raising premiums on the individual market, both on and off the Obamacare exchanges, to compensate for the loss of the payments.
However, many states directed Obamacare insurers to put all of the costs for the cost-sharing payments onto silver plans, a term called “silver loading.” That boosted the tax credits provided to low-income Obamacare customers.
The size of the tax credits is pegged to the second-cheapest silver plan, so as the cost of silver plans rises, so do the tax credits. The Department of Health and Human Services estimated that the average second-cheapest silver plan premium would rise 37 percent for 2018.
People can use the higher tax credit to buy a cheaper bronze plan or a gold or platinum plan that offers more benefits.
Obamacare advocates are touting the zero-cost plans to boost signups on open enrollment, which ends Dec. 15.
“We think there is a gap in knowledge among consumers and the affordability of health insurance,” said Josh Peck, co-founder of the enrollment group Get America Covered. Peck was the chief marketing officer for the federally run exchanges on healthcare.gov, which is used by residents in 39 states and the District of Columbia to buy Obamacare, under the Obama administration.
Peck said the Trump administration hasn’t highlighted the affordable options in e-mails touting the law this year. He said his group is trying to use information from foundations such as Kaiser on the affordability options and try to put that information “out front and center so people can go look for themselves.”
Other groups such as the liberal Organizing for Action highlighted zero-cost plans. “Health insurance for $0 per month? That’s right — coverage may be cheaper than you think,” the group tweeted earlier this week.
But the zero-cost plans don’t mean healthcare is completely free. The tax credits help pay down premiums for a healthcare plan, not the deductibles.
A 2017 bronze plan had an average deductible of $6,092 for an individual and $12,393 for a family, according to data from the site healthpocket.com that provides information on health plans.
The tax credits, also, can be used only by people who earn only a certain amount of income, leaving people who earn too much forced to pay higher premiums. In 2017, 84 percent of enrollees on healthcare.gov received a subsidy, according to an HHS report.