The individual market for health insurance – where approximately 20 million Americans purchase health policies – is insecure and unstable, according to America’s Health Insurance Plans (AHIP), a national trade association for approximately 1,300 health insurers.
Writing to the Senate Finance Committee, Marilyn Tavenner, CEO and president of AHIP, said, it “clearly faces immediate and significant challenges, especially for the 2018 plan year.” Tavenner ran the Centers for Medicare and Medicaid Services when the Affordable Care Act (ACA) was being implemented.
According to AHIP, about half of those buying in the individual (or nongroup), market are enrolled in exchange policies, many with premium and/or cost sharing reduction (CSR) assistance; the remainder own unsubsidized “off-exchange” health insurance.
The ACA was designed to correct the ills of this sector, architect Jonathan Gruber claimed in 2013. “Those minority of Americans who are buying their insurance in a broken market today, we’re going to fix that market.”
“Some of these challenges are the result of the structural issues and policy decisions during the initial years of Affordable Care Act operations,” Tavenner said.
She asked policymakers to address “the trajectory of higher premiums and costs” and “fewer, if any, coverage choices.”
According to Kaiser Health News, nearly a third of counties offered only one insurer on the exchanges this year, an increase over just 7 percent in 2016.
Advisory company McKinsey and Co. reports that 89 insurers stopped offering exchange policies for 2017. More than 40 carriers across over 30 states exited the marketplaces in the 2015 and 2016 plan years.
UnitedHealthcare announced in April 2016 that it was leaving most insurance exchanges, and last August Aetna Inc. said it would exit 70 percent of the counties in which it had offered exchange policies.
Some of these withdrawals impact not only those purchasing exchange plans, but also those purchasing outside the marketplaces. For example, in June 2016, Blue Cross, Minnesota’s largest individual health insurer, decided against renewing those policies.
In early February, Humana Inc., citing financial losses, elected to discontinue 2018 individual plans in 11 states. Anthem Inc., the sole 2017 individual insurer in 20 Ohio counties, will discontinue exchange and off-exchange coverage in all but one; the company blamed unpredictability and “a shrinking individual market” for the decision.
Blue Cross/Blue Shield of Kansas City will abandon individual insurance in 25 Missouri counties, and carrier exits have left two Washington state counties without individual coverage.
Blue Cross and Blue Shield of Nebraska has decided to discontinue exchange plans and the two off-exchange policies it sold. The remaining payer, Medica Healthcare, hasn’t decided its future in the state.
Iowa was hard hit after Aetna and Wellmark Inc. dropped out. Gundersen Health Plan participates in only five of Iowa’s 99 counties and hasn’t committed to selling policies next year.
Medica, the last carrier, “will not be able to serve the citizens of Iowa in the manner and breadth that we do today,” Greg Bury, a company spokesman, told Bloomberg News. “Our ability to stay in the Iowa insurance market in any capacity is in question at this point.”
In 2017, average individual policy premiums grew by about 25 percent over 2016. Caroline Pearson, senior vice president at consulting firm Avalere Health, notes that 2017 pricing was set early and “in the absence of full competitive information.” Premiums could have been higher, she speculates, if insurers had known about their competitors’ exit plans.
The Department of Health and Human Services reports that average 2017 premiums for Healthcare.gov customers were significantly higher than those in the pre-ACA nongroup sector.
“Average monthly premiums increased from $232 in 2013 to $476 in 2017, and 62 percent of those states had 2017 exchange premiums at least double the 2013 average.”
These findings align with an eHealth analysis of off-exchange purchases. According to the online broker, average family monthly premiums have increased 140 percent since 2013, while average individual monthly premiums have increased 99 percent.
For 2018, “you could see big price increases in regions without competition,” says Pearson.
More insurers dropouts will likely result if CSR payments aren’t continued. CSR subsidies have been made to carriers to reduce deductibles and copayments for low-income Ameri-cans, but – because they weren’t allocated by Congress – were found unconstitutional by a federal district court.
This uncertainty, wrote Tavenner, “will lead to fewer, if any, plan choices for millions of consumers.”
After Humana’s withdrawal, 16 counties in Tennessee lacked any 2018 individual coverage. While Blue Cross Blue Shield is signaling an openness to re-enter, it reserves the right to reverse course. Tennessee GOP Sens. Lamar Alexander and Bob Corker advocate that Americans in “bare” counties be permitted to use their ACA subsidies to buy off-exchange policies, but this remedy won’t benefit consumers without any insurance providers.
Sen. Claire McCaskill, D-Mo. suggests that those lacking coverage options be enrolled in the Washington, D.C., exchange. This, she says, “is a solid step that Republicans and Democrats can get behind.”
Insurers have until the fall to finalize 2018 nongroup offerings. The administration’s decision on CSR funding is expected in August.
Dana Beezley-Smith, Ph.D., is in private practice serving children, adults and families in Green, Ohio. Her email is: firstname.lastname@example.org.