ACA plan premiums to fall 2% in 2021, marking third year of lower premiums

Following years of market volatility, premiums for benchmark Affordable Care Act plans are set to drop for the third consecutive year, with the Centers for Medicare and Medicaid Services predicting a 2% drop for plan year 2021.

For states that use Healthcare.gov, the federal exchange website, 22 more insurers will offer coverage next year, bringing the total number of insurers in the exchanges up to 181. To date, Healthcare.gov plans have dropped a total of 8% since the 2018 coverage year. 

"Benchmark" plans are the second-cheapest plans in the marketplace, so called because the federal government uses them to calculate tax credits to lower the cost of coverage.

WHAT'S THE IMPACT?

In 2021, four of the 38 states that use the online exchange to sell ACA plans – Iowa, Maine New Hampshire and Wyoming – will see double-digit drops in average benchmark plan premiums for 27-year-olds. 

For two of these states – Maine and New Hampshire – CMS has used its authority to approve State Innovation Waivers under Section 1332 of the Patient Protection and Affordable Care Act to establish state-based reinsurance programs, contributing to the decline in premiums.

Insurer participation is increasing for the third year in a row, according to CMS, with the percentage of enrollees with access to just one insurer dipping to 4%, a dramatic 25% drop from 2018. Also in 2018, counties with just a single insurer totaled 50%. In 2020, that number dropped to 24%, and in 2021 it's expected to be about 9%.

For 2021, there will be 288 counties nationwide with a single issuer offering plans through the exchange, down over 80% from a high of 1,582 counties with a single health insurance issuer offering plans through the exchange in 2018.

In all, more than three quarters of enrollees will have access to at least three insurers.

The numbers speak to the lasting power of the ACA, which has withstood attempts by GOP lawmakers to chip away at the law. The Trump Administration has ended cost-sharing reduction subsidies to insurers, cut funding for outreach and enrollment programs, reduced the open enrollment period and increased access to short-term health plans that aren't required to comply with health protections enshrined in the ACA.

That in turn led to payers enacting premium increases, prompting major insurers to leave the exchanges. But the market began to stabilize near the dawn of this year.

Average premiums are still higher than when the ACA was birthed, and consumers still are experiencing problems affording plans if they don't qualify for subsidized coverage. The average benchmark plan premium for a family of four has increased from $794 in 2014 to $1,486 in 2021, CMS said.

This year, the Healthcare.gov enrollment period for 2021 plans is November 1 through December 15.

THE LARGER TREND

At the first presidential debate in late September, President Trump and his challenger, former Vice President Joe Biden, clashed over the future of the ACA. Trump repeatedly failed to present any plan for replacing the law, which has a greater chance of being struck down by the Supreme Court if his nominee, Amy Coney Barrett, is confirmed.

Trump's healthcare accomplishments consist of allowing drug importation from Canada and other countries and an executive order protecting individuals who have preexisting conditions – an order that has little legal force.

Biden has come out in favor of strengthening the ACA and adding a public option that would allow government plans to compete with private insurers.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com