Premiums for benchmark silver plans on the federal individual market exchanges will drop in 2019, marking the first decrease since the Affordable Care Act was implemented, CMS Administrator Seema Verma announced on Thursday.
Verma attribued the 1.5% overall drop to looser regulations, the Trump administration's market stabilization rule and the seven 1332 State Innovation Waiver approvals that launched reinsurance programs.
Tennessee will see the sharpest premium decline, as average monthly premiums for silver plans fell more than 26%, from more than $600 last year to $449. North Dakota had the greatest increase, with average premiums rising more than 20% from $312 per month to $375. Sixteen of the 39 states using the federal exchange will see declines, two states will have no change and the majority of the remaining states will face marginal, single-digit increases.
Verma dismissed the idea that President Donald Trump's cut-off last year of the cost-sharing reduction payments hurt the market, although the action was followed by a nearly 40% jump in average premiums as insurers added the cost to benchmark silver plans in a move known as "silver loading."
Analysts have credited the slim premium increases insurers have announced so far this year as a correction to excessive 2018 rate hikes.
But Verma defended the expansion of short-term, limited duration plans as an affordable option for people who can't afford Obamacare plans. Potentially, they could appeal to the 20 million Americans who don't have coverage, she added.
"The prediction was that the offering of short-term plans would have negative impact on the market and increase premiums, but we're not seeing the impact on the market," Verma said.
The administrator also announced the administration will be writing new guidance for 1332 waivers to allow states to broaden exchange plan design "to create more affordable options," but said the new reinsurance programs are a key part of the overall drop in premiums.
Federal exchange states that launch reinsurance programs in 2019 will see decreases in premiums as expected, but prices will not fall to pre-2018 levels. Wisconsin, which had its 1332 waiver approved earlier this year, will see a drop in averages from $464 in 2018 to $440 for 2019. In 2017, average silver plan premiums in the state were just over $300. Maine's average premiums will decline from $482 in 2018 to $446 in 2019, still more than $100 per month higher than the $316 in 2017.
New Jersey will see the sharpest decrease with its reinsurance waiver. In 2017, average silver premiums were $286 per month, rising to $339 per month this year. With reinsurance, they will settle in at $286 per month in 2019.
Last year, Alaska — which has the highest insurance premiums in the country — saw a drastic decline after implementation of its waiver. Average monthly premiums fell from $759 in 2017 to $595 in 2018. Next year they will drop again to $576.
The CMS hasn't made enrollment projections for 2019 based on these new numbers, but Verma added that more people may opt for the federal exchanges "when we're not seeing double-digit rate increases."
Verma said the administration still wants changes to Obamacare's exchange rules.
"For millions of people, the law needs to change," she told reporters. " While some have publicly been accusing us of sabotage, we have been doing everything we can to mitigate problems of Obamacare."
