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Fewer people are signing up for Obamacare if they don't get subsidies

Nearly 3 million Americans who don't qualify for Obamacare subsidies have dropped their coverage since 2016, a new federal report shows.

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Tami Luhby
CNN — Nearly 3 million Americans who don't qualify for Obamacare subsidies have dropped their coverage since 2016, a new federal report shows.

As the battle over the Affordable Care Act's fate heats up, the Trump administration released the study Friday showing that unsubsidized enrollment cratered by 45% between 2016 and 2019. Officials point to the trend as a sign of the law's failings.

The declines varied widely by state, with only 4% of the unsubsidized Rhode Islanders leaving but 90% of unsubsidized Iowans dropping out. The report looked at individual market policies that adhere to the law's provisions and are bought either on the Affordable Care Act Exchanges or off them.

Subsidies are not available to those who make more than 400% of the poverty level, which this year comes to about $50,000 for an individual and $103,000 for a family of four.

Obamacare premiums for the benchmark silver plan skyrocketed 22% for 2017, partly because enrollees were sicker than insurers had expected in the initial years and they hadn't priced their policies correctly. They then rose 37% for 2018, partly because President Donald Trump stopped reimbursing insurers for another key Obamacare subsidy.

Those who qualified for Obamacare subsidies, however, were shielded and paid no more than roughly 10% of their income toward premiums.

For the past two years, premiums have dropped slightly as insurers have learned how to better price their policies. Insurers have been returning to the exchanges because they now see it as a profitable business.

The rate of people dropping unsubsidized policies slowed from 2018 to 2019, as premiums stabilized. Still, nearly 326,000 fewer people were enrolled monthly in unsubsidized plans in 2019 compared with the year before, on average, while only 84,000 people in subsidized policies dropped their coverage.

Overall, average monthly enrollment in the individual market -- in both subsidized and unsubsidized policies -- peaked in 2016, reaching 14.5 million. About 8.2 million people were in subsidized coverage and 6.3 million in unsubsidized plans.

In 2019, average monthly enrollment was 11.7 million -- with roughly 8.3 million people in subsidized policies and nearly 3.4 million in unsubsidized ones.

The future of the Affordable Care Act is at the center of the 2020 presidential election. Trump's Justice Department is supporting a case before the Supreme Court that seeks to overturn the law. His administration has also expanded alternatives to Obamacare, such as short-term policies that typically have lower premiums but don't have to adhere to the Affordable Care Act's protections for those with preexisting conditions.

Former Vice President Joe Biden, on the other hand, has proposed enhancing the subsidies on the exchanges so that no one has to pay more than 8.5% of their income for coverage. Also, he would implement a public option that would aim to have lower premiums.

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