Here’s how Trump’s tax law is raising health insurance premiums

Approximately six months ago, Congress passed a tax law designed to benefit corporations and the wealthy while repealing the Affordable Care Act’s individual mandate penalty.

Today, we’re already seeing the consequences: Premiums in the individual market are rising, often by double digits. As more and more states hit their deadlines for insurers to file preliminary premium rates, the headlines tell the same story, with average premiums going up by 30 percent in Maryland, 19 percent in Washington, and 24 percent in New York.

{mosads}This is no surprise — and no accident. The repeal of the mandate penalty was the latest in a long line of actions that the Trump administration has taken to deliberately undermine the ACA marketplaces.

President Trump himself has not exactly been subtle about this, remarking last year that “the best thing we can do politically speaking is let ObamaCare explode.” Similarly, former White House advisor Steve Bannon exclaimed, “That’s going to blow that thing up — gonna blow those exchanges up, right?” when describing Trump’s decision to cancel ACA cost-sharing payments last year.

Congress knew in advance that the individual mandate played an important role in stabilizing the market, and that repealing the mandate penalty would cause premiums to go up. The non-partisan Congressional Budget Office estimated that repealing the mandate penalty would increase individual market premiums by 10 percent on average in 2019.

In fact, Trump’s own former Secretary of Health and Human Services, Tom Price, recently admitted that the repeal “actually will harm the pool in the exchange market because you’ll likely have individuals who are younger and healthier not participating in that market, and consequently that drives up the cost for other folks in that market.”

In their proposed premium rate filings, insurers have confirmed Price’s assessment and stated plainly that the repeal of the mandate penalty was a major factor driving up premiums. For example, Kaiser Foundation Health Plan of Maryland wrote that, “The elimination of the Individual Mandate is expected to have a significant impact,” while the CEO of CareFirst BlueCross BlueShield stated, “There’s been a series of actions taken by the current administration that have undermined enrollment.”

Other insurers also noted that the market had been improving before the Trump administration and Congress stepped in to destabilize it. “The ACA market has had sufficient time to stabilize,” PacificSource Health Plans of Oregon wrote, “. . . however we project that market morbidity will worsen due to the removal of the individual mandate.”

Some states, such as New York, actually asked insurers to estimate what their premium increases would have been if the individual mandate penalty hadn’t been repealed – and the answers were striking. According to this data, individual market premiums in New York are rising by 24 percent on average for 2019, but would have risen by 12 percent on average if it weren’t for the tax law.

In other words, Congress’s actions are directly responsible for doubling the average premium increase in New York.

Importantly, consumers who qualify for the ACA’s tax credits will largely be shielded from these premium hikes. But with each act of sabotage by the Trump administration, health care becomes harder and harder to afford for middle-class enrollees who don’t qualify for financial assistance.

Luckily, some states are taking action to protect their residents from sabotage by the Trump administration and Congress. For example, New Jersey and Vermont recently enacted legislation to establish their own individual mandates. In addition, New Jersey and other states have been working to establish reinsurance programs and limit the short-term “junk plans” that the Trump administration has proposed expanding.

That’s a stark contrast from the approach we’ve seen from the federal government. The Trump administration and the Republican Congress may have failed to repeal the ACA and cap Medicaid funding last year, but they remain intent on undermining the ACA by any avenue available. 

This week, the “Health Policy Consensus Group” led by former Sen. Rick Santorum (R-Pa.) and conservative think tanks unveiled their latest proposal to repeal the ACA, which could presage yet another repeal effort by Congress. And recently, Trump’s Department of Justice broke with its constitutional duties by refusing to defend the ACA from a lawsuit and asking the court to strike down the ACA’s protections for people with pre-existing conditions

While this lawsuit is frivolous and unlikely to succeed, the Trump administration’s actions make clear that they don’t plan to stop attacking the ACA any time soon. So it’s time to call this what it is — sabotage. And the target of this sabotage isn’t just a law. It’s the health care of Americans across the country whose costs are going up.

Thomas Huelskoetter is a health policy analyst at the Center for American Progress.