Insurers around the country are joining the Affordable Care Act marketplaces this year, in “a complete 180” from 2017.
That’s according to Cynthia Cox, a research director with the Kaiser Family Foundation. Around this time last year, several insurers were pulling out of the marketplaces due to uncertainty and some counties came close to having no coverage at all.
“We’re seeing over a dozen insurance companies entering or reentering into state marketplaces on the exchange,” she said Friday during a webinar focused on this year’s open enrollment period for Healthcare.gov, which runs Nov. 1 to Dec. 15 for 2019 coverage.
Molina Healthcare is rejoining Wisconsin’s individual exchange next year, after pulling out for 2018. In early August, Gov. Scott Walker posted a letter from Molina announcing the company has filed rates for next year. The company cited the guv’s reinsurance plan as a major factor in deciding to rejoin the market.
That plan was approved in July, and Walker’s office says it’s expected to lower premium rates next year by 3.5 percent from 2018 rates.
Cox says insurers on average have become “quite profitable” in the Obamacare market. Average growth margins per enrollee have increased sharply, and insurers are paying out a smaller share of premiums in the form of medical claims.
“It took insurers a few years to figure out how to appropriately price for this market, and to figure out what kind of plans to offer to be competitive,” she said.
She pointed to another factor insurers may be considering: the repeal of the individual mandate. Since that has led to higher premiums both on and off the exchange, Cox says it might be “a bit safer” for insurers to be on the exchange, “where subsidized consumers are generally sheltered from high premiums.”
Since insurers on average are profitable, Cox says, premiums on Healthcare.gov will be falling on average. Citing figures from the Centers for Medicare and Medicaid Services, she said the benchmark silver premium on exchange will be 1.5 percent lower in 2019 than this year.
However, some enrollees that get subsidies will have to pay more for coverage, because the premium tax credits are tied to the cost of the benchmark premium.
“If the premium decreases, so will the tax credit,” said Jennifer Tolbert, director of state health reform for KFF.
Cox provided some other caveats to the figures on falling premiums. Premiums are holding or dropping in more than half of the states that use the ACA exchange, but they’re increasing in nearly as many states.
“That’s because insurers are not profitable everywhere,” Cox said.
In North Dakota, she says insurers were losing money quickly at the end of last year. Going into 2018, they only raised rates about 8 percent, “which was not enough to regain profitability,” Cox said.
“So it’s no wonder they are raising rates the steepest this year,” she said. “At the same time, Tennessee is kind of the opposite story.”
Insurers in Tennessee were among the most profitable last year, and going into 2018 they raised rates more than 50 percent, she said.
“So again, it’s no wonder they’re overpriced and dropping premiums in Tennessee,” she said.
Cox also said premiums would be dropping more on average if the individual mandate hadn’t been repealed and loosely regulated plans hadn’t been expanded.
Cox says those buying subsidized coverage on the exchange will keep paying a reduced premium that’s tied to their income. That means on-exchange buyers are “mostly sheltered” from premium increases, “as long as they’re willing to shop around and possibly switch plans.”
“But it’s the people buying off the exchange, unsubsidized coverage, who are not sheltered from higher premiums,” she said. “When we think about the impact of the individual mandate repeal, it’s really being felt most by middle to upper middle income people who aren’t eligible for subsidies — and a number of these folks have already been priced out of the market.”
The KFF researchers highlighted a new rule change which could impact insurance purchases this year. Insurers are now permitted to require repayment of any unpaid premiums before issuing coverage for next year, Tolbert said.
Not all insurers will have the requirement, but those that do must provide notice in enrollment materials.
“Consumers who want to renew their coverage with the same insurer may need to repay any outstanding premium debt to get their 2019 coverage,” Tolbert said. “If they are unable to repay the premium debt, they can enroll in a plan offered by another insurer, if one is available.”
–By Alex Moe