Urban’s estimate for 2019

The Urban Institute just released their estimate of the 2019 individual market. They’ve accounted for the elimination of the individual mandate and the proliferation of underwritten short term plans.

The TLDR: Far fewer people covered at higher federal outlays.

The elimination of the individual-mandate penalties and the other policy changes…will lead to an additional 6.4 million people uninsured in 2019 compared with prior law (12.5 percent of the nonelderly population uninsured compared with 10.2 percent).
 expanded short-term, limited-duration policies… increase the number of people without minimum essential coverage by 2.5 million in 2019. Of the 36.9 million people without minimum essential coverage, 32.6 million would have no coverage at all (completely uninsured),and 4.2 million would enroll in expanded short-term limited-duration plans.
The combined effect… would increase 2019 ACA-compliant nongroup insurance premiums 18.2 percent on average in the 43 states that do not prohibit or limit short-term plans.
Federal government spending in 2019 will be an estimated 9.3 percent higher than under prior law, owing to the combined effect of expanding short-term limited-duration policies,

This makes mechanical sense. The short term plans and the lack of an individual mandate are two different ways of taking relatively healthy people out of the ACA individual market. Fewer relatively low cost people in the pool means higher average morbidity and higher average per capita claims. Higher per-capita claims mechanically ties into higher premiums. Higher premiums for subsidized buyers means a 1:1 ratio in federal subsidies.

Most of the change is happening in the healthy non-subsidized and lightly subsidized segments of the individual marketplace. A 63 year old non-smoker making $13,000 either qualifies for Medicaid or can buy a 94% Actuarial Value CSR enhanced Silver for no more than $22 per month on the Exchanges. They are not going to find a better deal in the underwritten market on either premiums or benefits.

However, a 23 year old earning $35,000 is looking to pay $271 per month for the Benchmark Silver plan with several thousand dollars in out of pocket costs. That is a lot of money for not a lot of gain. The only people who will think that this is a good deal are 23 year olds with significant medical history or reasonable probability of pregnancy. If people choose to stay covered, the economically rational response for most 23 year olds would be to get underwritten, pay $100 or less a month in premiums and barely use any services over the course of the year anyways. Urban does not project a 1:1 replacement of ACA coverage with underwritten coverage. They project a net loss in coverage.

Overall, Urban predicts that 40% of the community rated, guaranteed issue market will disappear next year due to policy changes enacted or proposed in the past three months.