SOURCE: HealthPocket

March 17, 2016 09:00 ET

Millions in Unsubsidized Health Insurance Market Face Uncertain 2017

Market Over Twice the Size of People With Government Exchange Insurance

MOUNTAIN VIEW, CA--(Marketwired - Mar 17, 2016) -  Given a risk of significant rate hikes in 2017, HealthPocket released an analysis today of the size and composition of the unsubsidized health insurance market. The market for unsubsidized health insurance has the greatest exposure to rate hikes among Affordable Care Act (ACA) health plans because those who are subsidized have premiums capped at a percentage of their income. However, HealthPocket's analysis reveals that the unsubsidized market is multifaceted and not equally affected by price increases among ACA health plans.

The perceived risk of rate hikes in 2017 is due to the recent spate of well-known insurers, including Blue Cross Blue Shield insurers, who have announced hundreds of millions of losses on Affordable Care Act health plans.

Using government and other public data sources, HealthPocket estimated that there are 28 million to 33 million people within the unsubsidized health insurance market. This market is over twice the size of the 2016 enrollees on government-based health insurance exchanges. Approximately 10 to 14 million consumers within this unsubsidized market buy health insurance off-exchange or on-exchange without the aid of premium subsidies, and these consumers will experience the greatest financial burden if significant rate hikes do occur for 2017. Higher rates would also continue to limit access to health insurance for the 3.7 million uninsured citizens who do not qualify for financial assistance and the 4.9 million uninsured immigrants who lack access to subsidies regardless of income. An additional 2.9 million people live in states without Medicaid expansion and make below than the federal poverty level, which excludes them from ACA subsidies, but still do not qualify for Medicaid health coverage. As with the other categories of uninsured, significantly higher rates will only make health insurance coverage less accessible for them.

Among the unsubsidized, there are 3 to 4 million consumers who are being displaced by the progressive cancellation of the grandfathered health plans from the pre-reform period that typically had lower premiums than ACA plans. It is unclear whether the displaced will migrate to the ACA market en masse or if higher rate conditions will disperse them across exchanges and current noncompliant health insurance alternatives. The fact that they choose to remain in noncompliant plans for as long as they have suggests that a significant portion will explore non-ACA alternatives in their health coverage shopping.

Some forms of non-ACA health coverage could witness further growth in 2017 should their existing price advantages expand due to significant rate increases among ACA plans. Since the public launch of the Affordable Care Act, growth has been reported among healthcare sharing ministries and term health insurance. The tax penalty for not having ACA compliant coverage has not led to declines among these types of coverage, likely due to issues such as exemptions and, in some cases, insurance cost advantages even when the penalty is paid alongside premiums. With respect to exemptions, the tax preparation service TurboTax reported that seven out of ten customers who were uninsured or partially uninsured in the past two years claimed an exemption from the penalty.

The full breakdown of the populations within the unsubsidized health insurance market can be reviewed at "Millions in Unsubsidized Health Insurance Market Face Uncertain 2017."

HealthPocket.com is a free website that compares and ranks all health insurance plans, helping individuals, families, and small businesses to make their best health plan decisions. HealthPocket publishes health insurance market analyses and other consumer advocacy research. HealthPocket's research is nonpartisan and uses only objective data from government, non-profit, and private sources that carry no conditions that might restrict the site from serving as an unbiased resource. HealthPocket, Inc. is independently managed and based in Mountain View, California. Learn more at www.HealthPocket.com.

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