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Analysis

As ACA Marketplaces Stabilize, Premiums Drop

By John Commins  
   January 16, 2020

An Urban Institute study found that 31 states saw a decline in premium costs for their lowest-price silver plan.

Premiums fell by an average of 3.5% for Affordable Care Act lowest-cost silver plans in 2020, signaling that the marketplace is stabilizing after uncertainty and price spikes in 2017 and 2018, according to a report from the Urban Institute.

Premium reductions were found in 31 states, according to the report, which looked at lowest-priced silver plans for a 40-year-old nonsmoker from 2017-2020.

The study found that premiums have stabilized in the past two years, and that more insurers are participating in the marketplaces. However, the study raised concerns about affordability for unsubsidized plans, especially in uncompetitive markets.

In 2018, the average silver plan premium increased by 30%, followed by a 0.4% decrease in 2019, as the ACA weathered challenges that included numerous legal challenges, funding cuts, and the elimination of the individual mandate penalty in 2017.

For 2020, lowest silver premiums saw an average 3.5% drop, with the average premium is $426, ranging from a low of $298 in Minnesota to a high of $871 in Wyoming.

Most low-cost silver premium states had more competition, often in the form of at least one Medicaid insurer, several non-Medicaid insurers, or a state reinsurance program. States with higher premiums frequently had little competition. 

"The individual market has clearly stabilized since the disastrous premium spikes of 2018, but some markets remain uncompetitive, and affordability is a problem across the board for the unsubsidized." said Kathy Hempstead, senior policy adviser at the Robert Wood Johnson Foundation.

The study used lowest-cost silver plan because it is the entry-level price for standard coverage and qualifies for cost-sharing reductions. The lower-cost plans also have high enrollment.   

In October, the Centers for Medicare & Medicaid Services announced that the average premium for a "benchmark" silver plan on HealthCare.gov for a 27-year-old will drop by 4% in the 2020 coverage year.

In addition, CMS said 20 additional health insurance companies are participating in the Federal Health Insurance Exchange in 2020, bringing to 175 the total number of issuers, up from 132 in 2018.

“The individual market has clearly stabilized since the disastrous premium spikes of 2018, but some markets remain uncompetitive, and affordability is a problem across the board for the unsubsidized.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

In 2018, the average silver plan premium increased by 30%, followed by a 0.4% decrease in 2019.

For 2020, lowest silver premiums saw an average 3.5% drop, with the average premium is $426.

Costs ranged from a low of $298 in Minnesota to a high of $871 in Wyoming.


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