CBO Expects Benchmark Premiums to Rise 15% Next Year

A federal review estimates that 5 million people have lost health insurance coverage in the past year, and the number of people with subsidized coverage through marketplaces has fallen by 3 million. 

The average premium for a benchmark plan in the Nongroup Health Insurance Market—not including tax credits—grew by 34% in the past year and will continue to see double-digit growth in the near term before leveling off in the next decade, the Congressional Budget Office says.

CBO blames the cost growth on three factors:

1. Insurers are no longer reimbursed for the costs of cost-sharing reductions through a direct payment;
    
2. A larger percentage of the population lives in areas with only one insurer in the marketplace;
    
3. Some insurers expected less enforcement of the individual mandate in 2018—which would probably encourage healthier enrollees to leave the market.

As a result, CBO projects that the premiums for benchmark plans will increase about 15% from 2018 to 2019.

Despite those increases, CBO projects the market for nongroup health insurance will be stable in most areas of the country over the decade. Premiums for benchmark plans are expected to increase by about 7% per year between 2019 and 2028.

CBO also found that:

• In an average month in 2018, about 244 million of those people will have health insurance, and about 29 million will not. By 2028, about 243 million are projected to have health insurance and 35 million won't.
   
• Net federal subsidies for insured people in 2018 will total $685 billion. That amount is projected to reach $1.2 trillion in 2028.
   
• Medicaid and CHIP account for about 40% of that, as do subsidies in the form of tax benefits for work-related insurance. Medicare accounts for about 10%, as do subsidies for coverage obtained through the marketplaces established by the Affordable Care Act or through the Basic Health Program.
   
• Since CBO’s most recent report comparable to this one was published in September 2017, the projection of the number of people with subsidized coverage through the marketplaces in 2027 has fallen by 3 million, and the projection of the number of uninsured people in that year has risen by 5 million.
   
• Projected net federal subsidies for health insurance from 2018 to 2027 have fallen by 5%.