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Trump will drive up Obamacare premiums nearly 20%

Dylan Scott covers health care for Vox. He has reported on health policy for more than 10 years, writing for Governing magazine, Talking Points Memo and STAT before joining Vox in 2017.

The Trump administration has insisted — as it cut Obamacare outreach funding, as it endorsed the repeal of the individual mandate, and as it opened up new avenues for people to buy health plans that don’t comply with the health law’s rules — that they weren’t actually doing any damage to the Affordable Care Act and its markets where millions of Americans buy health insurance.

We heard it again last week when the Trump administration announced that it would expand short-term insurance plans that don’t meet the ACA’s requirements. CMS Administrator Seema Verma was asked about expert arguments that premiums will go up as young and healthy people leave the ACA markets for noncompliant plans.

”We expect virtually no impact on the individual market premiums,” she told us. “We strongly feel this could help millions of Americans who are looking for an affordable option.”

That was borne out in the administration’s own estimates, which anticipated as few as 100,000 people would move from Obamacare plans to these short-term plans and projected a negligible impact on premiums.

But a new independent analysis, released Monday by the Urban Institute, serves a striking rebuttal to the administration’s rosy outlook. According to the analysis, nearly 9 million more Americans will lack minimal essential health coverage — uninsured, as far as the CBO is concerned — in 2019 and insurance premiums will increase by an average 16.4 percent across the country.

The Urban researchers looked at three scenarios to estimate the effect on insurance coverage in 2019:

  • The ACA before the Trump administration’s meddling
  • The ACA after Republicans repealed the individual mandate and Trump officials cut enrollment outreach
  • The ACA with no mandate and reduced outreach plus the expansion of short-term non-ACA plans

Their numbers told a strikingly different story from the Trump administration: 9 million fewer people with ACA-compliant coverage — which is effectively the CBO’s standard for defining whether you are uninsured or not — once you add up the mandate’s repeal, outreach cuts, and the expansion of short-term plans.

About 4.2 million would be covered by the non-ACA short-term plans — which can have annual or lifetime limits, which might cover fewer services, and which can discriminate based on health status.

The Trump administration is, in other words, overseeing a significant rollback of the historic coverage gains made under President Barack Obama and the ACA.

(A quick note on terminology: The CBO has more or less adopted the ACA’s standard for what constitutes “minimal essential coverage.” Trump officials could argue that some Americans don’t need such robust coverage, but the CBO uses this definition because under the non-ACA plans, people could face a significant financial liability if their “health coverage” has a dollar cap on benefits or doesn’t cover services they need.)

The Urban analysis also belies the Trump administration’s claim that Obamacare premiums won’t increase as younger and healthier people exit the law’s marketplaces after the mandate is repealed and short-term plans are more readily available.

The Obamacare customers who receive federal tax credits — about 80 percent of the marketplace — will be mostly inoculated from any premium hikes. But higher premiums will lead to more federal spending per person and they also could make coverage unaffordable for middle-class families with incomes too high to qualify for the subsidies.

The Urban researchers accounted for the mandate’s repeal and the short-term plans in calculating the premium increases. They also analyzed a few different state scenarios: Most states will feel the entire brunt of the short-term plans expansion but several actually prohibit those plans and a few will feel a more limited impact because of their state laws.

Premiums are going up everywhere, thanks to the mandate’s repeal, according to Urban. It’s just a matter of how much.

The inescapable conclusion of the Urban report: Trump’s policies will lead to millions fewer Americans being protected from medical bankruptcies and will drive up costs — either for the federal government or for middle-class families — for the people left in the ACA markets.

This story appears in VoxCare, a newsletter from Vox on the latest twists and turns in America’s health care debate. Sign up to get VoxCare in your inbox along with more health care stats and news.