Last week, President Donald Trump took a mighty swipe with his pen and dramatically changed our healthcare system. If you buy your own health insurance, you’ll want to pay close attention to the details—though all Americans could be affected.
Back up. What did Trump do?
Last Thursday, he signed an executive order promoting a series of changes that conservatives have long supported, like supporting the purchase of health insurance across state lines; making short-term, minimum-coverage policies more available; expanding the use of health reimbursement arrangements; and making it easier for some groups to band together and purchase group health plans (known as association health plans).
On Friday, Trump took a far more controversial, and immediate, step: He announced the end of so-called "cost-sharing" subsidies paid by the government to insurance companies. These are designed to keep down the cost of deductibles for lower-income policyholders. The payments could stop as soon as this month. According to the Congressional Budget Office, this will result in insurers raising premiums an estimated 20 percent to cover the shortfall.
Then on October 17, bipartisan senators reached a deal "in principle" to restore these cost-sharing payments for two years in exchange for giving states more flexibility to customize Obamacare rules—but there are no guarantees this plan will pass through Congress. And it's likely too late to roll back any premium increases for 2018.
Who’s on the hook to pay that increase?
Certain (but not all) people who purchase their own health insurance.
In total, there are about 17 million Americans who buy individual policies: 12 million who purchased insurance from an exchange last year, and 5 million who purchased policies directly from insurers. (About half of Americans get insurance through work; the rest are covered by Medicare or Medicaid or don’t have coverage at all.)
Roughly 10 million of the 12 million exchange buyers qualify for government subsidies that reduce their monthly premiums. If insurers raise premiums in reaction to this step, their government subsidies will rise by the same amount, so they are protected.
The rest of this group—5 million who buy on their own, and another 2 million who pay full price (i.e., without a subsidy) through the exchange—will likely get hit square between the eyes by that 20-percent projected increase. And that's on top of already-proposed increases, such as one insurer’s 50 percent rate increase request in Maryland. Ouch.
What about the rest of Trump’s executive order?
While many of the changes wouldn’t take effect until next year’s open enrollment at the earliest, we may see others much sooner: The order calls for new regulations within 60 days addressing association health plans and short-term insurance options (which typically have higher out-of-pocket costs, fewer covered services and are designed to cover, say, someone who expects to be out of work and without insurance for a very limited time).
Keep in mind, however, that these slimmed-down insurance plans may not be required to comply with current health insurance regulations, like covering essential services and not denying coverage based on pre-existing conditions.
What if I get my insurance through work? Am I affected?
Instability in the market makes insurers more likely to raise rates for everyone—so you can probably expect insurance premiums to take a bigger bite out of your paycheck next year, too.
And if your job is unstable, or you’ve been thinking about a change—particularly if it’s whether to jump into self-employment—you may want to hit pause on that plan while this year’s health insurance enrollment period shakes out and the individual insurance market settles down.
Just like individual shoppers—who’ll certainly experience sticker shock during open enrollment this year—the best thing you can do is to carefully weigh your insurance policy options and start prepping your budget now to shoulder extra costs.
Related: 101 Ways to Save More Money Now
This article has been updated to include new developments.
October 17, 2017