CBO expects 34% jump in ACA premiums

April 10, 2018

Premiums for certain Affordable Care Act plans are expected to spike by 34% this year, prompting a $10 billion increase in federal subsidies, the Congressional Budget Office said today.

Between the lines: CBO’s estimates strongly suggest that this year’s increases are a response to the repeal of the ACA’s individual mandate, on top of new regulations from the Trump administration.

CBO is anticipating a 21% jump in the cost of federal subsidies this year, driven by a 34% jump in premiums for the “benchmark” plans to which those subsidies are pegged.

But after that, CBO expects a big slowdown. Federal spending on the ACA’s premium subsidies will likely grow by about 5% per year for the rest of the next decade, the budget office said. Those annual increases are mainly a result of rising health care costs.

How it works: Premiums go up every year, and premiums inside the ACA’s marketplaces had seen some very big spikes before Trump was elected. This isn’t entirely on Trump.

But there’s no question the repeal of the mandate, and his decision to end a separate stream of payments to insurance companies, drove premiums even higher this year, and will have a similar effect next year.

Why it matters: The ACA’s insurance markets are increasingly turning into an option that only really works for the lower-income people who receive premium subsidies. Those payments largely insulate them from skyrocketing premiums, while unsubsidized consumers are finding ACA coverage further out of reach.

Axios has the full story