Today marks the third anniversary of the Affordable Care Act’s implementation in Nevada. So it makes sense for Nevadans to ask: How is the law playing out in the state?
Not well. Roughly 72,000 people purchased 2016 health insurance on the state’s Affordable Care Act online exchange, where they likely found an unpleasant surprise. Monthly premiums for their plans will be 8.43 percent higher, on average, than they were in 2015. Worse yet, 20,000 had to scramble for new providers after the ACA-sanctioned Nevada Health CO-OP collapsed. Deductibles and out-of-pocket costs are also on the rise, and health care provider networks are narrowing. The combination of these factors helps explain why the federal government recently halved the number of people it expects to sign up for the law’s health insurance.
Yet while the outlook for the Affordable Care Act is already bleak, the data show it will likely become even worse.
That’s the result of an analysis I conducted in recent weeks. Using the latest health insurance exchange enrollment data and a model funded in part by the U.S. Department of Health and Human Services, I estimated how the Affordable Care Act will affect the health insurance market over the next decade.
In brief: Costs will continue to rise and coverage will continue to underwhelm. In fact, coverage will likely begin declining in the next few years, leaving millions more Americans uninsured than today.
The looming premium increases in Nevada show next year will be a particularly rough one, but subsequent years will also be costly. Premium increases for 2017 health insurance will average 7.4 percent for individual plans. Family policy holders will likely pay 6.2 percent more. That trend will hold for years to come; the Affordable Care Act’s tax dollar assistance programs for insurers, known as “risk corridors” and “re-insurance,” will expire at the end of next year, leading to further growth in premiums.
Over the next decade, individual and family policy holders will see their rates increase more than 60 percent by 2025. That comes to $5,500 a year for an individual policy, and $23,500 for family coverage, on average.
Even federal subsidies will not be enough to cover these costs. Just between 2016 and 2017, policy holders should expect to pay $600 more in premiums, even after subsidies are factored in. As premiums continue to increase in subsequent years, that out-of-pocket cost will rise correspondingly. Nevadans with individual and family plans, respectively, can expect to pay $2,000 and $8,000 more a year by 2025.
This leads to the second component of my study — the decreases in overall coverage. As costs continue to rise, they will discourage people in Nevada and across the country from purchasing any health insurance at all.
This is happening already. Last year’s data show the IRS fined approximately 7.5 million Americans for choosing to forgo health insurance entirely, even though the Affordable Care Act penalizes them for doing so. The reason is often simple. Consumers forced to choose between an expensive penalty and an even more expensive health insurance plan will often choose the cheaper option. It may be a financial necessity. The number of people making this choice will rise as insurance becomes ever more expensive.
This will undermine the Affordable Care Act’s central goal of universal coverage. The total number of uninsured in 2025 will be about 40 million — roughly as many uninsured Americans as there were before the law was passed.
Such is the Affordable Care Act’s likely future as it nears its third anniversary. This puts in context the claims of presidential candidates such as Hillary Clinton, who in December said the Affordable Care Act is “working.” That may make for a good sound bite on the campaign trail, but it doesn’t match with the experiences of the many Nevadans who are dealing with the law firsthand. They’re paying more and getting less with every passing year — a trend that shows no signs of changing any time soon.
— Stephen Parente is a professor of health finance, the associate dean of the Carlson School of Management and director of the Medical Industry Leadership Institute at the University of Minnesota.