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Health Insurance Premiums On Federal Exchange Are A Bit Lower, Though Not In Pennsylvania

Andrew Harnik

Pennsylvanians are paying a bit more next year for health insurance purchased on the federal exchange, even though premiums for the rest the country have slightly dropped.

Coleman Drake, a health economist at the University of Pittsburgh, says nationally rates are about 4 percent lower than last year.

“I think for 2018 and 2019, we were still seeing the effects of uncertainly surrounding the Trump administration’s actions. And now we’re in this kind of steady, somewhat stable state,” said Drake. “It’s bit of a strange market, but insurers know more or less what they’re dealing with.”

In contrast, Pennsylvania’s insurance commissioner reports premiums are about 4.9 percent higher in the commonwealth. Drake, however, says that after factoring in subsidies for low-income people, rates are just 1.9 percent higher.

In the future, insurance might become more affordable.

Next year Pennsylvania plans to switch to a state-run exchange, which policy makers say is less expensive to operate. The state wants to apply these savings to establish a reinsurance program, which is when a state insures the insurer.

Under the Affordable Care Act, people can’t be rejected for pre-existing conditions. Companies must insure even the sickest, most costly patients; as a result, insurers increase premiums for all customers, to pay for the expensive care of just a few.

“So, what reinsurance programs do, is they don’t allow the costs of treating patients like that to have a large effect on insurers' decisions to operate in the market or not, or how they operate in the market,” said Drake.

Twevle states have been approved for these programs: Alaska, Colorado, Delaware, Maine, Maryland, Minnesota, Montana, New Jersey, North Dakota, Oregon, Rhode Island and Wisconsin. Pennsylvania is attempting establish its reinsurance program by the time premium rates are set for 2021.

Places with lower premiums also generally have more venders selling on the exchange. In Pennsylvania there has only been modest improvement on this front.

Additionally, a couple states have created tax penalties for people who aren’t insured, which replaces the individual mandate which was repealed last year.

Regarding enrollment on the federal health insurance exchange, numbers are down both statewide and accross the country. Nationally, 2,372,957 have purchased insurance so far, including 83,118 Pennsylvanians. At this time last year those numbers were 2,424,913 and 92,775, respectively.

Drake says a possible factor for this decline is the Trump Administration’s loosening of restrictions on short-term health plans, which aren’t available on the exchange.

“Although they have lower premiums, they don’t meet the definition of a qualified health plan that provides people with essential health benefits,” he said.

Another reason sign-ups are lower is that some states have expanded Medicaid, insuring people who were previously purchasing health care coverage from the exchange. This does not impact Pennsylvania, which expanded Medicaid in 2015.

People have until December 15 to buy health insurance for 2020.