With open enrollment for health insurance plans underway there have been a number of conflicting news reports about the status of ObamaCare and potentially dramatic increases in health insurance costs for the coming year. Here we’re going to explore 4 potentially major changes to ObamaCare in 2017 and beyond:
There Will Be Fewer Insurance Providers
Starting in 2017, many Americans under ObamaCare will have far fewer choices when it comes to selecting an insurance provider. According to an article by Daily Signal customers in two-thirds of U.S. counties will only have access to one or two insurance providers. Customers in rural areas will be hit the hardest. Some states, including Arizona and Texas, are losing up to six insurers, and only one state, Virginia, is adding insurers under Obamacare.
Part of the issue is that some major insurance providers are dropping out of the exchange or scaling back where they offer services. Aetna announced this past August that it was leaving 11 states where it had previously been part of the exchange. United Healthcare made a similar announcement in April 2016. The CEO of UnitedHealth Group, Stephen Hemsley announced that United Healthcare would be exiting the ObamaCare marketplace in 2017 based on poor earnings.
This change could be devastating for the thousands of Americans covered under Aetna and United Healthcare. Changing health insurance companies can be stressful and confusing. Those with chronic health issues rely on healthcare providers they know and trust. A change in insurance providers could mean a change in doctors and quality of healthcare.
ObamaCare Premiums are Increasing Dramatically
Beginning in 2017, the most popular insurance plan under ObamaCare will cost about 22% more than in 2016 according to the NY times. Premium increases will vary greatly based on location. Phoenix customers, for example, are looking at a 125% increase in premiums.
The Obama administration however (as expected) has pointed out, more than 80% of Affordable Health care customers won’t be greatly impacted by the rate increases. This is because they receive subsidies to help them cover the cost of their premiums. However, nearly 10 million Americans, who either don’t qualify for subsidies or who buy individual coverage outside of the exchange, could see dramatic increases in their premiums.
One reason for the dramatic increase in premiums is that the costs for insurance companies under ObamaCare were underestimated. Many insurance companies are paying out too much in patient care vs. the premium dollars they are collecting. Part of the issue is that there aren’t enough young healthy people paying into the exchange. Insurance companies need more healthy customers, who are unlikely to incur large healthcare costs, paying premiums in order for them to be able to pay out claims for customers with pre-existing and chronic health conditions.
The ObamaCare Tax Penalty Will Increase
In order for ObamaCare to work, it requires that as many people pay into the exchange as possible. In order to encourage participation, the tax penalty for not having insurance coverage increases annually. While in 2016 the tax penalty increase was drastic, in 2017 and beyond the increase is meant to keep up with inflation. See the table below details on the ObamaCare penalties for not having health insurance.
|Year||Penalty (Single)||Penalty (Family)||Maximum Penalty|
|2019||No penalty||No penalty||No penalty|
|2018||$695 or 2.5% of income||$2,085 or 2.5% of income||$13,100|
|2017||$695 or 2.5% of income||$2,085 or 2.5% of income||$13,100|
|2016||$695 or 2.5% of income||$2,085 or 2.5% of income||$13,000|
|2015||$325 or 2% of income||$975 or 2% of income||$12,500|
|2014||$95 or 1% of income||$285 or 1% of income||$9,800|
Unless exempt, taxpayers who don’t carry health insurance have to either pay a penalty based on a percentage of their adjusted gross income or a flat fee, whichever is greater. In 2017, the fee for the percentage of adjusted gross income will remain at 2.5%. The flat fee penalty will be adjusted based on inflation. Some low-income taxpayers are exempt from having to paying the penalty as are some other groups including members of certain religious groups and incarcerated individuals.
ObamaCare Could Change Drastically Under a New President
In recent weeks, ObamaCare has been a hot topic for the presidential candidates. Trump has made big promises to push Congress to repeal the Affordable Healthcare Act.) He plans to make healthcare more affordable by changing the laws that prevent the sale of health insurance across state lines. Among other initiatives, he also wants to allow individuals the ability to fully deduct the insurance premiums they pay from their tax returns.
Clinton, on the other hand, plans to “defend and expand the Affordable Healthcare Act.” Her initiatives include wanting to bring down the costs of out-of-pocket expenses by offering individuals a tax credit and giving people age 55 and older the option to purchase Medicare. She also wants to create a government run health insurance option, which would allow customers to purchase health insurance directly from the federal government.
Unsurprisingly, experts are divided on how either plan would workout in the long run. Experts also question if either candidate would be able to accomplish their lofty goals as it depends greatly on which party has control of Congress.
While the long-term outlook for ObamaCare remains unclear, for 2017, customers will need to do their homework if they want to save money on healthcare costs. One of the best ways to do that is by comparison shopping. Individuals can go to HealthCare.Gov view plans on the exchange and see if they qualify for government subsidies that will lower their premiums. Individuals who don’t qualify for a subsidy can also purchase individual coverage outside of the marketplace with the help of an insurance broker.
Also, customers shouldn’t just consider the cost of their monthly health insurance premium when enrolling in a new plan. They should also make sure they are comfortable with the out-of-pocket costs and deductibles they could incur under a certain plan. Those likely to be going to the doctor often may want to consider paying a higher premium with lower out-of-pocket costs.
Lastly, individuals shouldn’t just automatically re-enroll in the plan they had last year. Given the major increase in premiums, customers should review the options for 2017 carefully. Customers should also keep in mind that December 15th is the last day for open enrollment, and just like Election Day, it will be here before we know it!