Mind of Money

January 25, 2018 at 4:04 am

How Does the Tax Reforms Affect Obamacare?

Judge gavel, stethoscope, and calculatorObamacare insurance providers will raise premiums in 2019 after the U.S. government implemented tax reforms, which repealed a mandate of the Affordable Care Act (ACA).

The mandate refers to the requirements that every American should have health insurance. DECO noted that it remains uncertain how this will affect ACA assistance, as insurers remain divided on renewing their participation in Obamacare’s exchanges next year.

Individual Insurance

Obama insurers will need to reach a decision by spring at the earliest whether to renew its involvement in the insurance exchanges. As for the insurance premiums, it will increase as the mandate’s repeal will cause four million Americans to skip coverage next year, according to the Congressional Budget Office (CBO). Standard & Poor predicts that between three to five million people will not apply for insurance in the next 10 years due to the repeal.

By 2027, the CBO expects 13 million people to forego insurance. This will trigger an annual rate hike of 10% every year beginning in 2019. CBO based its forecast on the fewer number of insured healthier individuals, as they will no longer need to pay penalties if they fail to sign up for insurance.

Obamacare Enrollment

The number of people who signed up for Obamacare under the 2018 enrollment period reached around 8.8 million people, down from 9.2 million Americans year over year. However, this could be because of a shorter enrollment period.

The deadline for applications on the 2017 period lasted until January 31, while the open enrollment period for this year ended by the end of 2017. The deadline for 2018 originally fell on December 15, although publicity for the extended period became ineffective as even insurance brokers were unaware of it.

Hospitals and medical providers need to prepare for the tax reforms’ impact on ACA assistance. On the other hand, more Americans will have to find ways on how to pay for potentially higher insurance premiums in the future.