Government To Spend $17 Billion On Insurance Subsidies In 2018

Julia Cohen | Reporter

The federal government will spend $17 billion on individual health insurance market subsidies in 2018, according to a Monday report from the Center for Medicare and Medicaid services.

The average subsidy rose from $373 in 2017 to $520 in 2018, a an increase of 39 percent, according to the report .

The reason for the increase in premium subsidies is the increase in premiums, the report states. Premiums rose 21 percent from 2016 to 2017, and an additional 27 percent from 2017 to 2018.

However, decrease in unsubsidized individual market enrollees is accelerating both of these trends. Unsubsidized enrollment decreased 20 percent from 2016 to 2017, according to the report. In contrast, subsidized enrollment only decreased 3 percent in the same time period. (RELATED: A Third Of GoFundMe Pages Are For Health Care Expenses)

Rising premium costs may have driven out unsubsidized enrollees, but driving out unsubsidized enrollees continues to increase premium and subsidy costs. As more people leave an insurance market, prices are likely to increase, thus, increasing the amount of subsidies needed to provide sufficient coverage to those who qualify.

Some states are seeing a “death spiral” in the unsubsidized individual market, the report states. Arizona, for example, saw a 73 percent decrease in unsubsidized individual market enrollment.

“It is clear that many Americans are being priced out of the health insurance market, especially for employed people who earn too much to qualify for tax credits and have no access to employer-sponsored coverage,” the report states.

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