Millions risk health coverage as they skip paying higher Obamacare premiums

(TNND) — A new report showed about 14% of Affordable Care Act enrollees didn’t pay their premiums in January, signaling that millions more could be losing health coverage in the coming months.

Centers for Medicare & Medicaid Services already announced a drop in enrollment in ACA, also known as Obamacare, plans this year.

And now a report from Wakely Consulting Group, which provides health care actuarial services, said that 14% of those who were enrolled for a 2026 ACA plan didn’t pay their bill in January.

Those folks have a grace period, usually three months, to start paying their premiums before they get kicked off their health insurance.

About 23 million Americans were enrolled, either actively or passively, in ACA plans through either the federal government’s platform or state-based exchanges, according to CMS.

That’s down from a record-high of just over 24 million people enrolled in Obamacare last year, before the expiration of enhanced subsidies that made coverage more affordable.

But if the 14% of current enrollees who didn’t make premium payments in January keep not paying and eventually get purged from the plans, then roughly 3 million more people will lose health coverage.

Simon Haeder, a health policy expert who teaches at Ohio State University, said upwards of 6 million people might drop off ACA coverage by the end of the year.

“We’re going down from the tip of the iceberg, but we’re still not quite there,” he said.

Haeder said there’s always going to be folks who begin the year with ACA coverage and fail to pay their premiums. Some will be people automatically enrolled who really don’t want coverage. Some may surrender their ACA coverage if they get better insurance through work.

But 14% “seems excessively high,” Haeder said.

And he thinks it’ll go even higher as hope fades that Congress will bring back the enhanced subsidies.

Wakely actuary Michelle Anderson told The Wall Street Journal they saw “a big drop” this January in people paying their Obamacare premiums.

The firm also noted there was significant variation across states in terms of the share of people paying their first premiums in January.

Despite expected price hikes, some people likely went ahead and enrolled for this year to keep their options open in case the expiring subsidies were reinstated, Haeder said. Some of those people probably also paid their premiums in January.

So, Haeder thinks even fewer people will keep paying in February and beyond as the sticker shock of higher premiums sets in.

“Life’s gotten more costly since January,” he said in a nod to higher gas prices brought on by the Iran war.

But disenrollment for nonpayment will take time to shake out, so health coverage could erode over the better part of the year, Haeder said.

The enhanced Obamacare subsidies were introduced in 2021’s American Rescue Plan and extended through last year as part of 2022’s Inflation Reduction Act.

KFF estimated that subsidized enrollees would see their monthly premium payments more than double, increasing by about 114%, on average without the enhanced premium tax credits. Unsubsidized enrollees were looking at a 26%, on average, hike in premiums.

The new analysis from Wakely determined that the higher ACA costs could ultimately drive down enrollment between 17% and 26% this year.

Wakely also found that enrollees were more likely to pick cheaper ACA plans this year.

Health plans are put in four categories: Bronze, Silver, Gold and Platinum.

Fewer enrollees opted for the Silver plan, and more opted for the less expensive Bronze plan. Bronze enrollment as a percentage of total enrollment expanded by almost 11%, and Silver enrollment was down by 17%.

Haeder said the cheaper plans also offer worse health coverage and expose people to higher out-of-pocket costs down the line.

“Probably has long-term implications, too,” he said. “You’re going to be less satisfied with your coverage when enrollment happens next year, and you’re going to start questioning the value of that insurance if the deductible is terrible this year.”

Both Wakely and Haeder said the composition of the enrollee pool is getting sicker, as healthy people decide to skip out on insurance to save money.

A greater share of sicker people will put upward pressure on premiums for everyone else, Haeder said.

“If you’re really sick and you have diabetes and you need coverage or something, you’re going to stay in the plan, even if it costs you,” he said.

But sicker people use their coverage more, costing the insurers more.

It’s not clear yet if insurers priced their plans correctly this year, given the smaller, less-healthy pool of enrollees, Haeder said.

Insurance companies are in it to make money, and Haeder said premiums could rise even more next year. And some carriers might even leave the market if the economics don’t pencil out for them, he said.

More uninsured patients strain hospitals and clinics. Rural providers are especially at risk of closures, he said.

Obamacare enrollment had plateaued at around 10.5 million people each year before the pandemic, but the subsidies gave a jolt to sign-ups, according to the Pew Research Center.

With the subsidies gone, and Haeder saying they’re unlikely to return, he expects enrollment could sink closer to prepandmic levels in the coming years. But he doesn’t expect enrollment to fall all the way to 10 million or so, pointing to population growth as one factor.