Copyright Newsweek
Next year, many Americans are set to see huge increases in the cost of their monthly health insurance premiums—although some are likely going to bear a greater weight of the price hikes. Small business workers (where health insurance benefits are not offered), self-employed Americans and those who have retired early (making them ineligible for Medicare) are likely going to be affected the most as marketplace health insurance costs increase next year, Joseph Newhouse, a professor of health policy and management at Harvard University, told Newsweek. Why It Matters Health care is a highly important issue to many Americans—a recent poll conducted by The Associated Press (AP) and NORC at the University of Chicago found that 81 percent of Americans thought health care was either an "extremely" or "very" important issue, second in priority only to the economy. The same poll also found that 57 percent of Americans were "extremely" or "very" concerned about rising health care costs. This comes as, due to the expected expiration of the enhanced tax credits at the end of the year, national average increases for Affordable Care Act (ACA) compliant plans are forecast to go up around 20 percent and employer health benefit plans are also expected to see an average increase of over 6 percent in cost next year. What To Know "In short, workers themselves bear the burden of rising health care costs," Zack Cooper, a professor of public health and economics at Yale University, and director of health policy at Yale's Tobin Center for Economic Policy, told Newsweek. He added that the burden "tends to fall disproportionately on workers earning less than $100,000 per year." This is likely because small business workers and owners, as well as self employed workers, make up 48 percent of adults under the age of 65 enrolled in individual market coverage, according to research by the health research organization KFF. Newhouse also said that older individuals, those aged between 50 and 64, will likely be more affected than younger people because "premiums are age adjusted but subsidies are not." Premiums also "vary substantially by geography, but subsidies do not," Newhouse said, adding that subsidies are a "function of income and household composition." This means that individuals living in areas with high medical costs or less insurer competition will be more impacted, he added. Also, those above the 400 percent federal poverty line will likely to lose all of their subsidies given that the ACA enhanced premium tax credits are set to expire at the end of the year, as the Trump administration has made no move to renew them. The expiration of the ACA subsidies is ultimately the crux of the health insurance cost issue. Jonathan Gruber, a professor of economics at Massachusetts Institute of Technology, told Newsweek that the ACA "fixed" the fact that "the self-employed and small businesses faced a highly discriminatory and expensive insurance market." "This made it easier to get insurance and importantly freed workers to start new businesses without fear of becoming uninsured," he said. This means that if the subsidies expire, "this will reverse part of this benefit," he added. Given that many self-employed and small business workers use ACA plans, there will likely also be certain occupations that are more widely affected, such as artists, who are often self employed, and those working in food preparation, retail sales, home health, beauty and wellness for example, who are more likely to work part time, Kosali Simon, a health economist and associate vice provost for Health Sciences at Indiana University Bloomington, told Newsweek. "Lower-income workers and those in service, retail, or creative occupations will likely feel the largest impact because they are over-represented among people purchasing individual marketplace coverage," she said. One implication of rising health care costs, in the context of the likely expiring ACA subsidies is that because the self-employed and small businesses are exposed to higher costs, it could make them "unwilling to start new businesses that grow the economy," Gruber said. What People Are Saying Joseph Newhouse, a professor of health policy and management at Harvard University, told Newsweek: "The most obvious wider repercussion is likely to be more uninsured individuals. They will continue to use some medical services, e.g., normal delivery, and they will not be able to pay the full cost of the more expensive of those services, so those costs will be shifted elsewhere. Further, some individuals will mitigate the premium hit by moving to a less generous plan with a lower premium (e.g., silver to bronze) and as a result may also be less able to pay the cost of the services they use. In both cases the groups most likely to drop or downgrade are the healthier group, meaning a sicker group of individuals will remain with insurance of a given level. Insurers have anticipated this, which adds to the premium increase for those remaining in the market." Daniel Polsky, a professor of health policy and economics, and director of the Hopkins Business of Health Initiative at Johns Hopkins University, Maryland, told Newsweek: "A thriving ACA marketplace supports self-employment and small businesses by making it easier to take risks as the cost of insurance is not an extra risk for these workers, owners, and entrepreneurs. The end of the enhanced subsidies would make it more difficult for this demographic to benefit from the ACA marketplace, thereby creating a negative ripple effect for this market. Employees of larger businesses already get very generous tax subsidies for health insurance because premiums for these plans are not subject to taxation (unlike insurance purchased in the individual market). The end of the enhanced subsidies would create a greater unfairness between the tax advantages for larger businesses and the self-employed." Kosali Simon, a health economist and associate vice provost for Health Sciences at Indiana University Bloomington, told Newsweek: "Rising marketplace premiums could lead to coverage losses among self-employed and lower-income workers, reversing recent gains in insurance coverage under the enhanced subsidies. This may increase uncompensated care and financial strain for households, especially in regions with limited employer coverage options. Any time there is a cut back in federal funds for health insurance, we should expect that some people will stop buying it, and that it would have wider repercussions." Paul Shafer, a professor of health law, policy, and management and co-director of the Medicaid Policy Lab at Boston University, told Newsweek: "Each of the groups faces a different kind of risk. Those owning successful small businesses may have higher incomes but may now be on the hook for the entire premium themselves, which can be upwards of a thousand dollars a month depending on where you live. Those with lower incomes will still get help, just less than before, and studies have shown that the enhanced subsidies were successful at boosting enrollment and affordability." He added: "The ACA needs a wide range of people enrolled to maintain a healthy risk pool, making coverage less affordable works against that goal. If younger and healthier folks drop out due to rising costs, premiums could grow even faster and there could be less competition with fewer enrollees. Higher premiums and out-of-pocket costs lead people to go without coverage, care, and/or medications, which can have disastrous consequences for their health and their budget, if they get sick or injured."
