Purchasers of individual marketplace health insurance could do with a break—the last two open enrollment periods saw large premium increases which hit unsubsidized purchasers particularly hard. Fortunately, most consumers are finally getting a break this year, with premiums staying about the same on average. The markets show promising signs of stabilization, but we live in uncertain times, so we’ll continue to monitor their vital signs (especially enrollment levels) to anticipate what the future may hold and what actions states may need to take to maintain affordable and robust coverage for their constituents.
Here are this year’s highlights:
Premiums: Carriers have submitted their prices to state insurance commissioners, so we have a good sense of what will happen with premiums. There will be a lot of variation this year among states: prices will go up or down depending on which state you live in, and which carrier you use. In Washington DC, silver plan premiums are increasing by 21%, but in Philadelphia, prices are dropping by 24%. Most areas are somewhere in between. In terms of overall trends, premiums across the country are increasing by about 3% on average, which matches inflation, so in one sense, premiums are staying constant. Why the good news? Our story begins in the early years of the exchanges, when some insurers priced too low and lost money. This was partly because they wanted to attract new customers, and partly because they didn’t know how healthy or sick their new marketplace customers were going to be. To make up for these losses and protect against regulatory uncertainty in the post-Obama era, they increased prices by quite a bit. This year, it looks like the carriers have realized that they increased rates too aggressively, and are slowing down so as not to price themselves out of the market.
Carrier Participation: In terms of carrier participation, the picture is much more positive than last year, when many insurers left the market and multiple counties faced the possibility of no carrier. For 2019, marketplaces will see nearly 100% carrier retention and a notable rise in all types of carrier interest—13 new entries into states, expansion by existing market participants, and returns to markets by some plans that had previously departed. The reason for this is that participating carriers have begun to get better financial results from their marketplace products—after the first difficult years of the market in which many plans were underpriced.
Enrollment: This is the biggest question mark during this open enrollment period, and we will be watching it closely. The individual mandate penalty will be set at zero for 2019, because of the tax bill that was enacted late last year. (In 2018, the penalty was $695 or 2.5% of income, whichever was higher.) Since there is no punishment for not having insurance anymore, one might expect that many people would exit the individual markets. A lot of reputable think tanks and academics from Kaiser Family Foundation, the CBO, Harvard and the Urban Institute have predicted enrollment declines of 7 to 26%, largely due to the loss of the penalty. On the other hand, human behavior is always difficult to predict, and there is a kind of “stickiness” to the decisions people make about their healthcare, and people often automatically renew their policies or just do what they did last year. Levels of enrollment will be very consequential for the health of the individual markets and the rates that are charged next year, so we’ll be hoping that enrollment is strong.
Navigator Programs: The federal budget for navigators will only be $10 million, compared to $37 million last year and $63 million two years ago. Those living in rural areas will be the most affected by these cuts, as these programs may not have the budget to conduct outreach there. This could impact the ability to obtain enrollment assistance from ACA navigators, although some states are providing their own navigator funding and brokers continue to be available resources.
Benchmark Plans: CMS passed their final rule recently, laying out the policies by which they will operate moving forward. The biggest change is that states have more leeway to define their “benchmark” plan. Here is a little background: since the 10 essential health benefits guaranteed by the ACA are somewhat broad, each state picks what is called a “benchmark plan” which establishes a minimum level of coverage, at a more detailed level of specificity, which all plans in the state must adhere to. Initially, there were a limited number of plans that could be used as a benchmark. But now, by allowing states more flexibility in determining the benchmark plan (either by keeping the 2017 plan, selecting another state’s plan, or mixing and matching components of different plans), some states can choose benchmarks which hold plans in the state to a lower standard. Lots of experts think this can spell bad news for the robustness of plans sold on the marketplaces. But don’t worry, the 10 essential health benefits are safe, and this new rule will not precipitate a significant erosion of coverage.
A Note on ACA Repeal and Replace Efforts: While not directly relevant to 2019 open enrollment, the status of Affordable Care Act (ACA) repeal and replace efforts can be very consequential for the individual market in the future. And given how close we are to the November elections, it’s a timely topic. Repeal and replace is still a priority for Republicans, although they have backed off of it since their attempts to pass a law last year. They certainly won’t try anything before the November elections—the political cost would be too high. However, if the Democrats win either the House or the Senate, Republicans could try to move something forward in the lame duck session. This would be a very bold move but is a possibility, given that Senator Mitch McConnell knows that the window for repealing the ACA will close if a Democratically-controlled House is sworn in next year. If the Democrats fail to take either the House or Senate, we think Republicans could interpret this as an endorsement of their platform and try to pass another ACA repeal bill in 2019.