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The Witching Hour Arrives with Trump’s First Open Enrollment

A critical moment has arrived for the Affordable Care Act (ACA).

We say that every few months, it seems, but it’s still true. The law survived multiple attempts to repeal it in Congress this year. Now, its fifth open enrollment period is about to begin, amid attempts by the White House to degrade the law.

The Colorado Health Institute debuts a report today on a key feature of the ACA — the individual mandate to buy coverage or pay a penalty. We have federal tax data to share that shows which groups in Colorado pay this penalty most often. (More on this near the end of this blog.)

Consumers can start buying insurance on the individual market and the ACA’s exchanges tomorrow, November 1. Open enrollment ends in most states on December 15, but Colorado’s period continues through January 12.

The individual market covers a minority of Coloradans, about 8.1 percent, but has become the public face of the ACA’s troubles as insurance prices continue to rise dramatically.

For people who don’t get ACA subsidies, insurance prices will rise an average of 34.3 percent in Colorado next year.

But — surprisingly to many — most people who do get subsidies will likely see their monthly bills decrease, according to the Colorado Division of Insurance. For example, subsidized customers in Colorado Springs had an average monthly insurance bill of $159 in 2017. Next year, the bill will drop to $112.

That’s because the ACA’s subsidies get bigger when the price of insurance rises. And prices are going up several reasons — some of them political.

Insurance companies still have a hard time figuring out the individual market, which is notorious for customers coming and going frequently, and often signing up only when they need medical care. Drug prices are rising quickly, too.

And then there’s politics. Colorado prices rose six percent because of the Trump administration’s decision not to pay insurers for subsidies they must offer their lowest-income customers.

Under President Trump, the federal government has cut back on advertising and outreach to get healthier customers into the insurance pool. Colorado runs its own exchange and has a measure of control over advertising and outreach, but the federal cutback will undoubtedly have an effect here.

Also, insurers say some of their price increases for 2018 reflect uncertainty over whether the Trump administration would enforce the individual mandate. Within the last month, the Internal Revenue Service declared it would still enforce the individual mandate, but that announcement was too late to affect 2018 prices.

The Colorado Health Institute wanted to take a deeper look at the individual mandate penalty. We dug up IRS data on who paid they penalty in Colorado in 2014 and 2015 — the most recent years data are available. In 2014, the ACA’s first year, nearly 145,000 Coloradans paid the penalty instead of buying insurance. That number dropped by 19,000 the next year as the penalty grew. Read our full analysis here.

This IRS data has been publicly available, but we have not seen an analysis of the numbers in Colorado. (Please let us know if we missed one.) With that in mind, we hope this new analysis sheds light on the effectiveness of the individual mandate as we enter this crucial open enrollment period.