A stethoscope in a doctor's pocket

While the Trump administration continues to use its regulatory and legal powers to reshape the Affordable Care Act (ACA), states are making their own moves to protect or expand their insurance markets.

The result: More than before, if you buy your own health insurance, where you live will determine your choice of health plans and what you will pay for them—and the geographic differences may be dramatic.

“States are lining up on where they stand with the ACA,” says Karen Pollitz, a senior fellow at the Kaiser Family Foundation, a nonprofit that focuses on national health policy issues.

ACA Health Insurance Costs
Average costs vary widely across the U.S.  Roll over to see current and projected premiums in your state.
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2018 Premiums
$300
$900
Sources: Kaiser Family Foundation, ACASignups.net, Commonwealth Fund. Notes: Average monthly premium is for the second-lowest cost Silver plan for 40 year old non-smoker (benchmark plan). Premiums for 2019 are initial proposals by insurers who have already announced that they will participate in those states. Rates will be finalized in the fall.

She says some states are trying to counteract federal-level changes by passing laws to preserve consumer protections the ACA put in place. Several states are implementing innovative programs to reduce costs for insurers, which can lead to more choice and lower rates for consumers.

Others are embracing the administration’s efforts to loosen regulations and are finding ways to sell less costly insurance that doesn't meet the ACA's required minimum standards. 

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Of course, the cost of health insurance, like real estate, has always been influenced by local factors. Healthcare costs in rural areas, because they are typically higher than in urban centers, make those places less appealing to insurers and so attract fewer of them. Big markets have healthier levels of competition that helps keep premiums down.

Your personal financial situation is also a major factor in what you pay for health insurance. Nearly 20 million Americans buy their own health insurance. About 60 percent of people who buy individual health insurance get some kind of subsidy that reduces their costs, Pollitz says.

But the degree to which what you pay is based on where you live is growing bigger, especially for the 40 percent of people who buy their own health insurance and make too much to qualify for financial help.

The High Price of Uncertainty

All of this change is happening at a critical moment. Open enrollment—when most Americans must sign up for health insurance for 2019—is coming up. People who buy their own health insurance must enroll between Nov. 1 and Dec. 15 in most states.

In terms of changes at the federal level, recent actions by the Trump administration are rattling health insurers just as they are trying to figure out what premiums—the amount you pay monthly for insurance—to charge for individual health insurance plans next year. 

These changes are injecting a new level of anxiety into health insurance markets. They include:

  • Less help for consumers. The Centers for Medicare and Medicaid Services (CMS), which oversees the ACA health insurance exchanges, announced that it is slashing funding to organizations that help people shop for coverage. Nonprofit organizations that provide navigators in states that use the federal Healthcare.gov online marketplaces will be $10 million for the 2019 plan year, down from $37 million for 2018 and $63 million in 2017.
  • Reduced support for insurers. CMS also said it is suspending, at least temporarily, a program for insurers known as risk adjustment. Under the $10 billion program, the federal government each year collects money from insurers who participate in the ACA exchanges who had healthier customers and redistributes the funding to insurers with sicker, more expensive customers. The money encourages insurers to sell insurance in the individual markets, both on and off ACA exchanges, because it offsets the risk of offering insurance to a wide group of people. 
  • Less costly, less comprehensive options. The Trump administration is loosening regulations so that insurers can offer cheaper but less comprehensive health insurance. In June, CMS finalized a rule on association health plans that allows businesses to band together to offer health coverage to workers. But the plans don’t have to follow all of the ACA's rules, such as the requirement to offer a minimum level of benefits. The agency is also expected to finalize another rule soon that would allow insurers to sell short-term insurance plans that consumers could use for up to a year, instead of the current three months. These plans can be significantly cheaper than ACA-compliant insurance because they exclude many basic benefits, such as prescription drug or maternity coverage, and because insurers can deny coverage to people with pre-existing health issues. CMS is encouraging navigators to promote these types of plans to consumers.
  • Weaker consumer protections. The Trump administration is supporting a legal challenge to the ACA by a Texas court, which could do away altogether with protections for people with pre-existing health conditions. Such a change, which could take years to happen, could also affect people who get insurance through their employer.  

A Tale of 50 Markets

The uncertainty caused by the Trump administration moves is "likely to contribute to substantial increases in exchange premiums across many states in 2019," says Matt Brow, president of healthcare consulting firm Avalere, based in Washington, D.C.

In an analysis of 10 states and Washington, D.C., that have released 2019 rate proposals, Avalere found that exchange premiums for the most popular Silver plans will be 15 percent higher, on average, compared with 2018 premiums.

But averages don’t tell the whole story. By state, the proposed rates represent everything from double-digit drops compared with 2018, to increases of more than 30 percent. In Minnesota, for example, the average premium on the benchmark Silver plan is expected to be 11 percent less this year compared with last, or $552 a month. 

That's because Minnesota, and a few other states, have instituted reinsurance programs to reimburse insurers who cover sicker, higher-cost customers, which in turn has helped insurers stem premium increases. 

In Maryland, by contrast, the average premium on benchmark Silver plans is projected to be 36 percent higher, or $869 a month, in 2019. Insurers there say the rate hikes are necessary because rising premiums are driving out healthier people willing to take the risk of going without insurance, now that Congress has done away with the financial penalty for doing so.

Nationwide, more people are expected to drop insurance in the absence of the mandate. That's leaving insurers with a smaller, more expensive group of people to cover. 

Maryland is awaiting federal approval to establish a reinsurance fund and insurers there say if it is created, rate increases would be significantly lower or even flat for next year.

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Other states are passing laws to counteract changes to federal health insurance rules, says Pollitz from the Kaiser Family Foundation.

Both New York and Vermont say they will not allow the sale of short-term health insurance for more than three months a year, and California is working on similar legislation. Even though the Trump administration is expected to give states the ability to have insurers sell these plans for up to a year, it's up to the states whether to go along.

And starting in January, New Jersey and Washington, D.C., will require residents to buy health insurance or face a penalty. Vermont will institute a similar law in 2020. The aim is that encouraging healthy people to buy insurance will make coverage less expensive for all. 

Other states are taking advantage of the Trump administration's desire to give them more decision-making power. In April, Iowa's governor approved a law that allows residents to buy something called a "health benefits plan," which is inexpensive but isn't insurance at all. Unlike ACA plans, these offer limited benefits, can cap annual coverage amounts, and don't have to accept people with pre-existing health conditions.

The governor said the move was necessary in Iowa, where participation in the health insurance market has plummeted, to give people an affordable option. Tennessee already offers this type of coverage, and North Carolina and Idaho are considering similar state-based plans that don't comply with ACA rules.