If you're planning to buy insurance under the Affordable Care Act, 2018 might be a painful year -- at least when it comes to your health insurance premiums.
However, if you have employer-sponsored health insurance, or health insurance through the military or the Veterans Administration, President Donald Trump's efforts to repeal and replace, or repeal via executive order, the Affordable Care Act (ACA), are unlikely to affect you in any major way next year.
A big factor in the outlook for health insurance in this second year of the Trump Administration is the president's executive order, signed in October, to end ACA's cost-sharing reduction (CSR) payments for low-income enrollees in the ACA marketplaces. Now experts are saying that insurers -- without the subsidies -- will need to increase premiums or exit the insurance exchanges created under the ACA.
"The healthcare system is a mess," says Carolyn McClanahan, a physician, financial adviser, and founder of Life Planning Partners. "The political fights over how our country will pay for healthcare are creating serious uncertainty in the health insurance market, and the end result will be significant increases in the cost of insurance for most consumers. Meanwhile, politicians fail to fix the real problem: underlying healthcare costs."
Others share similar sentiments. "President Trump has already had a number significant effects on the health insurance markets," said Michael Stahl, executive vice president and chief marketing officer at HealthMarkets. "In fact, while the ACA is still the law of the land, it's truly Trumpcare now."
Stahl noted, for instance, the following events that took place in 2017:
While Trump signed an executive order his first day in office instructing the IRS to be lenient regarding the tax penalty, the IRS recently confirmed that it will still enforce it, said Stahl. According to the ACA, if you can afford health insurance but choose not to buy it, you must pay a fee called the individual shared responsibility payment. (The fee is sometimes called the "penalty," "fine," or "individual mandate.")
Despite repeated attempts to repeal and replace Obamacare, Congress has not, so far, been able to pass a new law, Stahl noted.
Trump recently signed an executive order a few weeks ago that instructs his agencies to consider making regulations looser regarding the availability of Association Health Plans, Short-Term Health Plans and Health Reimbursement Accounts. "It's important to note that no regulations have been yet put in place and it will take a few months for this process to work its way through the system," Stahl said.
One Mess: Cost Sharing Reduction
And then there's this change: According to the Kaiser Family Foundation (KFF), "the ACA requires insurers to offer plans with reduced patient cost-sharing (e.g., deductibles and copays) to marketplace enrollees with incomes 100-250% of the poverty level. The reduced cost-sharing is only available in silver-level plans, and the premiums are the same as standard silver plans. To compensate for the added cost to insurers of the reduced cost-sharing, the federal governments makes payments directly to insurance companies. The Congressional Budget Office (CBO) estimates the cost of these payments at $7 billion in fiscal year 2017, rising to $10 billion in 2018 and $16 billion by 2027."
But the president, by executive order, is doing away with CSRs. And that will wreak havoc, say experts. According to a KFF report published earlier this year, insurers that choose to remain in the marketplaces -- instead of exiting the ACA marketplaces -- will need to raise silver plan premiums on average 19% to offset the loss of CSR payments.
In a more recent report, however, KFF said premiums for 2018 Marketplace plans are rising significantly in many counties across the country, in part due to the decision of the Trump Administration to cease payments to insurers for CSRs. "Insurer participation also declined in many areas, leaving more counties with only one insurer, which likely contributed to the high rate of premium growth," the KFF noted.
But there's another side to this story. According to Stahl, the CSRs (lowering deductibles and other out-of-pocket expenses) are still required by law to be offered to consumers but with the loss of government funding gone, insurers have raised premiums significantly to compensate.
And this, he said, "has had the fascinating effect of increasing premium subsidies in concert, meaning that the vast majority of consumers will have their net monthly premiums be equal or even lower than last year -- about $100/month or less."
Most interestingly, Stahl said, for the same reasons, 99% of counties will now have a $0 premium bronze plan available for some consumers. "This will be exceedingly attractive for many consumers, especially those who are young, healthy and otherwise might be uninsured and pay the tax penalty -- a $0 monthly premium is certainly more attractive than a tax penalty," he said.
Are You Pre-Medicare? Visit HealthCare.gov
"Many things are up in the air or have changed significantly for the under-65 marketplaces creating a chaotic atmosphere," said Katy Votava, president of Goodcare.
Given that chaotic atmosphere, McClanahan said, those shopping for ACA health insurance for 2018 should do their homework now and be conscience of the deadlines to enroll in a plan. The 2018 open enrollment period (OEP) runs from Nov. 1, 2017 to Dec. 15, 2017.
According to HealthCare.gov, this is a shorter enrollment period than previous years, so it's important to act quickly. If you don't act by Dec. 15, you can't get 2018 coverage unless you qualify for a special enrollment period, according to HealthCare.gov. Plans sold during open enrollment start Jan. 1, 2018.
"Consumers need to review their needs and make choices very soon," said Votava.
"My recommendation is to take the old football approach to focus on blocking and tackling," she said. "Tackle the basics and get organized before you shop for coverage. Determine which enrollment deadlines pertain to you and your family, put lists together of things you need coverage for such as medications and healthcare providers, and then get started on shopping ASAP. If folks delay, they will face roadblocks like customer support that is hard if not impossible to come and websites will bog down."
McClanahan also recommends using a reputable health insurance agent to help you pick the best plan for you. "It's best to use an independent agent who can look at multiple options," she said. "If an independent agent is not available, compare different companies."
Stahl noted that Trump not only cut the open enrollment period in half, but he also cut funding for advertising HealthCare.gov by 90% and funding for Navigator assistance by around 40%.
Pre-Medicare and Early Retirement
For those considering early retirement, prior to becoming eligible for Medicare, Jae Oh, author of Maximize Your Medicare, said the calculation has become much more difficult. "Total overall healthcare costs for those just prior to reaching Medicare eligibility is likely to be higher, especially for those that have received CSR benefits under the ACA," he said. "That can entirely change the reasoning a person uses when considering early retirement."
For those in excellent health, Oh said, "the weaker plans" can be coupled with "ancillary" policies that will make a cash payment if a person is diagnosed with cancer, suffers a stroke or heart attack. "This will make financial sense for some, if they cannot qualify for premium subsidies," he said.
According to Oh, weaker plan means insurance with a lower premium, higher deductible and out-of-pocket expenses. "The 'ancillary' products, such as critical illness policies, can provide funds to assist payment of these higher bills, which have resulted from weaker insurance," he said.
"The executive and congressional haggling have created a cloud of confusion that increases fear," said Votava. "Fear is a bad actor in any marketplace creating a fog over people's decision making."
For example, she said, Medicare beneficiaries are not affected by inside beltway actions, yet people think they are. "That anxiety makes it more difficult for Medicare beneficiaries to focus on making sound choices," said Votava. Medicare open enrollment for 2018 runs from Oct. 15 to Dec. 7. Learn more at medicare.gov.
Stahl also took note of the fact that there have been no material changes to the Medicare market yet. "Republicans have proposed eliminating certain taxes that go into the Medicare Trust fund and therefore would make its stability more precarious long-term, however, none of that has made it into a bill that's passed," he said.Stahl's best advice: "Make sure you don't miss the open enrollment period and shop around for the best option. With all the complexity and uncertainty surrounding healthcare, it's important to use an insurance agent adviser who can educate you, dispel any myths and ensure you find the coverage you deserve at the best price."
Oh also said those enrolled in a Medicare Advantage (MA) plan, which are offered as an alternative to the traditional Medicare program, or those who plan to enroll in such a plan should "expect MA plans to continue to get even more competitive as health insurance carriers focus on markets where their financial gains and losses can be predicted with a higher degrees of accuracy."
According to KFF, more than 19 million Medicare beneficiaries (33%) are enrolled in MA plans in 2017. And for 2018, KFF reports that there will be 2,317 MA plans will be available nationwide for individual enrollment in 2018 - the largest number of plans available since 2009. What's more, the KFF reported that average Medicare beneficiary will be able to choose among 21 Medicare Advantage plans in 2018, an increase from 19 in 2017.
Become an Empowered Patient
"With consumers responsible for more and more of healthcare costs, we must be assertive in making sure our healthcare dollars are used wisely," said McClanahan. "Let your healthcare providers know you are concerned about costs and you want them to keep that in mind when working with you.
If tests are ordered, ask the doctor what they plan to do with the results, said McClanahan. "If they can't answer the question, the test may not be necessary," she said. "Ask if less expensive medications can be used or if any lifestyle changes would help the situation."
Reach out to Your Senators and Representatives
"Tell them to change the conversation and actually fix the healthcare costs and insurance premiums," said McClanahan.
Employer-Sponsored Health Insurance
Meanwhile, workers with employer-sponsored health insurance will likely see their premiums rise -- having little or nothing to do with the Trump Administration. Annual premiums for employer-sponsored family health coverage reached $18,764 this year, up 3% from last year, with workers on average paying $5,714 towards the cost of their coverage, according to the Kaiser Family Foundation/Health Research & Education Trust 2017 Employer Health Benefits Survey.
TheStreet's feature series "Inside Trump's First Year" looks at the biggest stories in business over the last year fueled by one of the most unpredictable presidents in history. Most importantly, TheStreet offers a glimpse into what could happen in 2018 on a range of issues -- and stocks -- in what will probably be an equally chaotic second year for Trump. Read more by tapping the photo below.