Average ACA Exchange Premiums Drop for Third Year Running

October 20, 2020 - The downward trend in ACA exchange premiums continued this year with the average premium for the benchmark plan dropping two percent for 2021 coverage year, although some premiums remain up to 36 percent higher than plan year 2017 premiums, according to a recent CMS announcement.

“The report shows the third consecutive year of improving market conditions under the Trump Administration’s new policies,” the press release said. “Issuer participation will also increase for the third year in row, which represents a dramatic increase in choice for consumers.”

While this year’s increment of decrease is less than last year’s four percent drop, combined with the previous two years it represents an eight percent decline in HealthCare.gov benchmark plan premiums since 2018 coverage year.

Premium declines vary by state. Four states will see double-digit decreases in benchmark plan premiums for 27-year-olds.

Two of these states leveraged a section 1332 state innovation waiver to form a state-based reinsurance program. At least 13 states have received approval for reinsurance programs, most recently the state of Georgia.

READ MORE: CMS Temporarily Lowers Individual, Small Group Exchange Premiums

One state, North Dakota, will face a major increase in the new plan year, with its benchmark plan premium rising ten percent or more.

Premiums also vary based on advance payments of the premium tax credit (APTC) eligibility.

For example, a 27-year-old APTC-eligible individual with an income 150 percent of the federal poverty level can get a 2021 silver lowest-cost plan for on average $57 in monthly premiums, as opposed to $369 per month for non-eligible enrollees with the same characteristics.

Premiums for non-APTC-eligible individuals have been dropping across health plan metal types for the lowest cost plans since 2018.

For both a 27-year-old individual and families of four, the average lowest cost plan premium for bronze, silver, and gold plans all hit a five-year high in plan year 2018 and de-escalated from that year to plan year 2021.

READ MORE: Employer Sponsored 2020 Out-of-Pocket Costs Were Stable Pre-COVID

However, although non-APTC-eligible enrollees have been seeing a decline in premium costs across metal types, all of these plans are still higher premiums than in plan year 2017, a fact which CMS acknowledged in the press release.

For example, while a 27-year-old on a benchmark plan will see a two percent decrease in premiums for plan year 2021, that premium will still be 27 percent higher than what the 27-year-old individual would have paid for that plan in plan year 2017.

“While today’s report shows the Administration’s efforts to stabilize the market are working, average premiums are still significantly higher than when the Affordable Care Act (ACA) was first implemented and affordability remains a significant challenge for people who do not qualify for a premium tax credit and must pay the entire premium themselves,” CMS stated.

“A recent report by CMS on enrollment among people with and without subsidies documents how unsubsidized enrollment continues to decline, suggesting middle income Americans continue to struggle to afford coverage.”

The Trump Administration has pointed to this decline in unsubsidized enrollment as an indicator that the Affordable Care Act exchanges do not actually decrease consumer healthcare spending.

READ MORE: What Happens if SCOTUS Overturns ACA, Besides Coverage Loss?

“For all our successes, too many Americans who do not qualify for subsidies still cannot afford premiums that remain in the stratosphere – constituting a new class of uninsured,” Verma said at the beginning of 2020 when CMS released the federal exchange enrollment numbers.  The Affordable Care Act remains fundamentally broken and nothing less than wholesale reforms can fix it.”

For some of the nearly nine in ten exchange enrollees (88 percent) who are APTC-eligible, however, premiums have only become more affordable since plan year 2017.

Gold and bronze plan premiums for 27-year-old APTC-eligible individuals with an income of 150 percent of the federal poverty level dropped consistently from plan year 2017 through plan year 2021.

Silver plan premiums for this group of individuals, though, saw an overall increase between 2017 and 2021 due to the benchmark plan premium and lowest-cost plan premium. APTC-eligible 27-year-olds in silver plans at 150 percent of the federal poverty level saw premiums increase from $50 per month in plan year 2017 to $57 per month in plan year 2021.

In terms of access, enrollees will have more quality health plan carriers to choose from in 2021 than in previous years, continuing a trend of increased payer interest in the exchange.

A total of 181 quality health plan issuers will be on the exchange in plan year 2021. Without considering states that formed their own state-based exchanges, this represents 22 percent more issuers than in 2020.

Nearly half of the states on the federal exchange (16 out of 36 states) have more payers on the exchange for 2021 than in 2020.

Options are also becoming more diverse within those states, with 27 states having counties that increased the number of issuers from 2020 to 2021. CMS attributed this to both new payers joining the exchange and existing payers expanding their footprints.