With uncertainty in the health insurance market, recent surveys have found that the uninsured rate is rising in the United States. In the second half of 2016, the rate of people without health insurance was 10.9 percent, but as of the third quarter of 2017, that rate has risen to 12.3 percent. The boost in the uninsured rate can be attributed to several factors, not least of which is concern over political happenings in Congress over healthcare reform.
Lack of Competition
This year, several major insurers pulled out of the Obamacare marketplaces, citing financial losses and instability in the private market as primary reasons for their departures. Competition for federal and state exchanges was already slim given the exit of insurers last year, and this year’s exodus of heavy hitters no doubt added to the distress. Lack of competition drives prices higher. Millions of Americans throughout the country have faced steep premium hikes in 2018, and some have opted to forgo health insurance altogether, which perpetuates the cycle of higher prices. This is especially true for those who don’t qualify for tax subsidies on the ACA exchanges, who’ve felt the full brunt of premium increases this year.
Individual Mandate
Not long after taking office, President Donald Trump signed an executive order authorizing government agencies to “waive, defer, grant exemptions from or delay implementation of” penalties related to the individual mandate issued under the ACA. Under that mandate, anyone without health insurance was required to pay an IRS penalty. The penalty was designed to encourage healthy individuals to purchase health insurance to offset the cost of care for older people or those with medical problems. Because people believe that the Trump administration will not enforce those penalties, many in the 18 to 25 age range have chosen to drop insurance, leading the uninsured rate in that age group to rise by 1.5 percent.
On December 20, Congress passed a sweeping tax reform bill that also repealed the individual mandate, but the repeal won’t take effect until 2019. Still, people are likely to skip out on health insurance this year – and next – knowing that the individual mandate is unlikely to survive.
Political Back-and-Forth
Republicans have offered several different options to repeal and replace the ACA, but none have been successful. Because Republicans based their 2016 campaigns on repealing and replacing the ACA, there is still a push to eliminate the Obama-era healthcare law and replace it with one that they feel will be beneficial to the middle class, many of whom are struggling under high health insurance premiums as they do not qualify for subsidies to offset those costs.
Because Republicans did not pass a new healthcare law by September 30, they must now create a bipartisan bill that will receive enough Democratic support to pass. Many Americans may be waiting to purchase health insurance until the outcome of a bipartisan measure that could result in lower premiums and better coverage.
Factors Behind the Uninsured Rate
The largest increase among uninsured Americans since 2016 include middle-aged Americans and racial minorities as well as those considered low income. Overall, people between the ages of 18 and 64 showed a 1.7 percent increase in the uninsured rate. When breaking down the range of ages, Gallup found the following increases:
- Ages 18 to 25 – 1.5 percent
- Ages 26 to 34 – 1.4 percent
- Ages 35 to 64 – 1.8 percent
Non-Hispanic whites saw an increase in the uninsured rate of 1.1 percent while non-Hispanic blacks had an increase of 1.5 percent. Hispanics reflected an increase of 1.6 percent in uninsured people. Americans with an annual income of less than $36,000 per year showed the highest increase with 1.7 percent, compared to only 1.1 percent of those making more than $90,000 per year and 1.3 percent for those making between $36,000 and $90,000. These numbers indicate that higher premium costs may be a factor in why Americans are choosing not to purchase health insurance from the exchanges.
Fewer People are Purchasing Their Own Plans
Americans aged 65 or older obtain insurance through Medicare, which is why a larger number of people in that age range are no longer purchasing insurance through the exchanges. However, since the end of 2016, fewer younger people are purchasing insurance on their own as well. The number of people purchasing self-paid plans has dropped from 21.3 percent to 20.0 percent. This represents a change from what had been the fastest growing type of health insurance since the ACA’s individual mandate took effect in 2013. Medicare coverage has also dropped half a percentage point since 2016.
Implications
Many experts believe that if Congress does not stabilize the insurance market, the number of uninsured will continue to grow. Cost-sharing payments to insurers, which subsidize out-of-pocket costs for low-income Americans, were cancelled in early October. It’s predicted this could lead to premiums that are 20 to 25 percent higher for 2018. In Iowa, the denial of waivers to stabilize their insurance market could lead to premiums that are 56 percent higher, and a similar issue in Oklahoma could lead to premiums as much as 30 percent higher.
Many in the insurance industry believe that the Trump administration is sabotaging the ACA in an effort to push Democrats to work with Republicans to repair what they see as irreparable flaws in the law. Until a bipartisan agreement is reached, it’s expected that premiums will continue to rise, resulting in an even higher uninsured rate.
