PROVIDENCE — The individual mandate penalty for the uninsured, zeroed out by the GOP tax law, remains in place for 2018 as HealthSource RI, the state-based Affordable Care Act health insurance exchange, reports continuing record numbers of both new and younger enrollees and considers a state-level coverage mandate.
Zachary Sherman, director of HSRI, said there are more than three times the number of new enrollees since this time last year at 6,100, with 31,700 people enrolled altogether as of Dec. 27, as the final day to enroll in health insurance approaches on Dec. 31. Last year the total number of enrollees was about 29,000.
“That is currently outperforming where we wanted to be,” Sherman said.
Sherman took particular note of the growing number of younger enrollees, those in the 18-34 age group, often referred to as “young invincibles.”
Twenty-five percent of renewing customers fall in the 18-34 age group. But 34 percent of new HSRI customers are aged 18-34. The development is promising for health insurer’s bottom line, and will lower health insurance rates during next year’s rate adjustment, said Kyrie Perry, director of communications, marketing and outreach for HSRI.
This year, most enrollees are seeing premium decreases, said Perry. Bronze health insurance plans in the HSRI exchange are seeing a 12 percent decrease in premiums, while gold plan premiums are seeing a 10 percent decrease.
The main cause of the decreases, Perry said, is the state’s collaboration with insurers to direct the rate increase caused by canceled federal CSR payments onto silver plans, which mainly increased ACA-mandated silver plan subsidies and also increased subsidies.
The ACA factors age, income and family size into the subsidies for health insurance, Perry said, but income is the strongest determinant. Younger people typically make less money, which results in bigger subsidies and lower premiums for many younger people, she said.
The premium decreases could be driving the increasing numbers of younger enrollees, Perry said.
The Republican tax bill passed Dec. 20 zeroes out the the ACA’s penalty for the uninsured in 2019. For 2018, the penalty for forgoing health insurance, known as the individual mandate, is $695 for a full year, or 2.5 percent of household income, whichever is larger. For each child younger than 18 without coverage, the penalty is $348, Sherman said.
When the penalty is set to zero in 2019, Sherman said, he expects more people to avoid purchasing health care insurance as a cost-cutting measure. That will reduce the pool of people buying in to the private health insurance market, particularly the “young invincibles” who help balance out the market’s risk pool since they are healthier and use fewer health care resources, resulting in rising rates. Without the individual mandate penalty, Sherman said, the Congressional Budget Office estimates premiums are likely to rise by 10 percent every year, in perpetuity. That’ll be a be a shock to those already struggling to pay current health care insurance premiums.
“In just a few years, it will get even more expensive, very quickly,” Sherman said. “The ACA’s consumer protections have been critical to our success. We are very likely to see our coverage gains eroded and our risk pool destabilized due to the repeal of the individual mandate. The costs associated with a higher uninsured rate, including uncompensated care and deferred health care, will be felt immediately by ratepayers, and will ultimately be passed on to Rhode Islanders in the form of premium increases.”
The prospect is concerning, Sherman said, despite the advantage Rhode Island has in discretion through the state-run HSRI exchange. That “leg up,” allowed the state to pursue its own advertising for health insurance enrollment during the summer when the federal government cut advertising for the program. It also allowed the state to extend the enrollment deadline past the federal deadline earlier this month, and afforded the flexibility to cooperate with insurance companies to direct increases from discontinued CSRs onto HSRI silver plans, which the ACA requires the federal government to subsidize, returning the cost back to the feds.
But the neutering of the individual mandate will require more strenuous local action.
“At the moment we are studying the implications of the individual mandate and how it would impact HealthSource RI customers, coverage gains and premium costs. We are also in the process of evaluating ways in which we could mitigate the impact of a repeal, including the possibility of a state-based mandate,” Sherman said.
Perry said HSRI is reviewing the possibility of a state-based mandate with the Office of the Health Insurance Commissioner and the state Office of Management and Budget. A state-level mandate would require the entities to draft legislation that would need to be passed by the General Assembly.
Rob Borkowski is a PBN staff writer. Email him at Borkowski@PBN.com.