The cost of the health insurance plans sold on Obamacare marketplaces has declined for the third year in a row, according to a new analysis.
In addition to the decrease in premiums since costs spiked in 2018, more insurance carriers are now participating in the marketplaces, according to a report published by the Urban Institute, a left-leaning think tank based in Washington, D.C.
The authors examined policies offering similar benefits in the 15 states that run their own marketplaces and the 36 states that rely at least in part on the federal marketplace. Premiums fell by an average of 1.2% from 2018 to 2019, 3.2% from 2019 to 2018 and 1.7% from 2020 to 2021, they found. That contrasts with a huge increase from 2017 to 2018 of nearly 32%, which the authors attributed largely to policies of the Trump administration intended to undercut the Affordable Care Act.
Prices dropped on the Obamacare marketplaces even as health insurance premiums rose overall.
“This decline is remarkable because it contrasts with premium increases in the employer-sponsored insurance market over the same period,” the report said. Premiums in employer-sponsored plans rose 3.9% in 2019 and 4.3% in 2020. (Data on rates in 2021 is not out yet, the authors say.)
Obamacare premiums varied considerably by state, because states have different insurance laws, demographics and numbers of competing insurance companies. Marketplace premiums fell by 31% in Iowa in 2021, the largest drop in a state this year. They rose by nearly 6% in Arkansas, representing the largest increase.
The number of insurance carriers participating in the marketplaces increased by 50% between 2018 and 2021, creating more competition and better prices, the authors said.
The authors attribute the big increase in premiums that occurred in 2018 to the Trump administration’s decision to stop paying insurance carriers for reducing certain out-of-pocket costs for lower income policyholders. Insurers reacted to the loss of those payments by raising premiums.
Another reason for the big premium increase that year, according to the authors, was insurers’ uncertainty over the impact of Congress’ elimination in 2019 of the penalty for people who failed to sign up for health insurance.