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Rural Subsidy-Eligible ACA Enrollees See Biggest Premium Declines

Analysis  |  By Jack O'Brien  
   December 03, 2019

Monthly premiums fell from $288 in 2017 to $162 in 2019 for subsidy-eligible enrollees in rural markets.

Premiums for subsidized health plans under the Affordable Care Act (ACA) fell more in rural markets than they did in urban markets from 2017 to 2019, according to research published in Health Affairs Tuesday afternoon. 

Average monthly premiums fell from $288 in 2017 to $162 in 2019 for subsidy-eligible enrollees in rural markets while monthly premiums fell from $275 to $180 for urban enrollees over the same period.

This latest report on premiums comes during the final three weeks of the ACA open enrollment period and one week after a Commonwealth Fund report found middle class families spent 11.5% of their income on premiums and deductible costs in 2018.

David Anderson, a research associate at the Duke Margolis Center for Health Policy, told HealthLeaders that from 2014 to 2017, individuals in urban areas saw premiums lower than their rural counterparts.

However, the trend began to reverse in late 2017 when President Trump axed cost-sharing reduction (CSR) payments which assisted individuals between 100% to 250% of the federal poverty line enrolling in Silver plans. 

Related: Unsubsidized Household ACA Premiums Top $1,400 Per Month

Anderson said insurers responded by 'silver-loading,' which means that the CSR costs were incorporated into Silver plan premiums. At the same time, federal government subsidies also rose significantly which made Bronze and Gold insurance plans more affordable, according to Anderson. 

While subsidy-eligible enrollees benefited from a decline in premiums, Anderson said that rural enrollees above 400% of the federal poverty level, where there are no enrollment subsidies, face more expensive insurance options than in urban areas. 

In contrast to subsidized enrollees, rural enrollees without federal subsidies saw monthly premiums increase by $91 from 2017 to 2019, while urban enrollees saw premiums increase by $86 over the same period.

"Rural areas that are served by a single insurer are most likely to be the most affordable regions where individuals receive subsidies," Anderson said. "[Rural areas] are also going to the least affordable regions for people who do not receive subsidies, so that dichotomy is real. In the near-term, [insurers] will more likely enter urban markets than rural markets, but as [insurers] enter rural markets, some of that gap will decrease a little bit."

Related: Unsubsidized Population 'Fleeing' Individual Health Insurance Market, Verma Says

Anderson said the hospital finance executives can expect the bad debt situation at their organizations to improve as a result of premiums declining for subsidy-eligible patients.

He said that providers should be able to find affordable insurance plans for patients who are uncovered or are underinsured. 

Anderson described this trend as a "stop-loss" strategy for hospitals and an opportunity to collect more from patients. He added that clinicians will likely be benefit from the change as well since patients will no longer avoid treatment due to financial limitations associated with coverage.

"There has been a proliferation of low-cost plans over the past two years that are not just catastrophic plans but have high actuarial value," Anderson said. "Any hospital finance assistance counselor should be able to look for those because they will serve both the patient and the organization well."

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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