Last week, President Donald Trump signed an executive order ending federal payment of cost sharing reduction (CSR) subsidies used to offset the cost of health insurance for low-income individuals. As a result, Americans' Obamacare premiums could skyrocket in certain states, especially for people who pay for their health insurance completely out-of-pocket in the individual marketplace. The states whose residents will experience the highest premium increases are also predominately those where Trump won his Electoral College votes in 2016.
Timothy Jost, a professor at Washington and Lee University School of Law and health care policy expert, tells Bustle that those who will be most heavily affected are likely to be "self-employed people" such as farmers, ranchers, and small business Americans.
"And they're going to see dramatic increases, often for the second year in a row," Jost says. "But ... many of them are people who really need to have health insurance ... many of them are people who voted for him [Trump]."
As NPR reported, insurance companies are required by law to provide discounted insurance to low-income individuals (those whose income is between 100 and 400 percent of the federal poverty level). Though Trump has ended the federal reimbursement of these CSR discounts, insurance companies must still provide them. As a result, many insurance companies have increased insurance premiums to offset the cost of having to pay for CSR subsidies on their own without federal reimbursement.
Substantial premium hikes are expected across many states. Indeed, according to ACA Signups, which analyzes ACA-related changes and policy, all states, with the exception of Alaska and Minnesota, expect premium hikes in 2018, and the average level of premium increases will vary from around 10 percent to over 50 percent in some states.
Premium hikes will particularly affect people who buy their insurance in the individual marketplace (not those with employee-provided insurance), but who do not receive any CSR subsidies. According to Vox, people who do not receive subsidies will include those below the poverty level in states that did not expand Medicaid under Obamacare or those who make more than 400 percent of the federal poverty level.
Charles Gaba, who founded ACA Signups, further explains the varied impacts of these premium hikes among states in an e-mail to Bustle, writing, " ... Generally speaking, the states with the highest percentage of people currently receiving CSR assistance will see the greatest impact on their unsubsidized individual market enrollees."
Gaba cites Florida, South Carolina, Oklahoma, Alabama, Idaho, and North Carolina as the top six states which have the highest percentage of people currently receiving CSR subsidies — which means that individual health insurance premiums will substantially increase in these states in order to compensate for subsidy coverage. For example, according to Protect Our Care, Florida's residents can expect an average premium rate hike of around 45 percent for plans on the exchange and South Carolina's residents can expect an average increase of around 31 percent.
Interestingly, as Vox pointed out, many of these premium increases were already planned for by insurance companies due to the uncertainty around what would happen with the Trump administration and Obamacare. Indeed, many states just assumed that federal CSR subsidy payments would not continue during the Trump administration and preemptively approved increased premium rates for 2018 before Trump's executive order was signed. However, this still means that uncertainty about health care stemming from the Trump administration's rhetoric and actions directly resulted in substantial premium increases.
Ironically, the states with the highest recipients of CSR subsidies — and those facing the highest premium hikes — are also states which predominately voted for Trump in the 2016 presidential election, something which the Chicago Tribune pointed out. Indeed, Trump won all of the aforementioned states of Florida, South Carolina, Oklahoma, Alabama, Idaho, and North Carolina.
However, it is important to note that a state's amount of CSR recipients does not fully determine how much of an impact premium increases will have on residents. As Jost also explains to Bustle, while premium increases will likely be highest in the states that have the largest number of people receiving CSR assistance, like the six states mentioned above, this does not mean that people who buy individual plans are automatically going to face skyrocketing costs. In fact, individual insurance costs will ultimately very much depend on how a state has instructed insurers to "load the cost of premiums," as Jost describes.
Some states never actually prepared for the possibility that CSR subsidy payments from the federal government might be eliminated and thus did not instruct insurers how to distribute the load from this loss. Now, as Jost notes, "in those states, the insurers are scrambling to get the rates redone, if it's permitted" — and, if not, they may withdraw from marketplace, which would further destabilize the market. And for voters who supported Trump in the presidential election, higher premiums could affect their perception of the administration.