In
spite of Republican attacks, the insurance markets under the Affordable Care
Act are stubbornly resilient. While consumers can expect sharp price increases
in some areas, premiums are going up modestly in others.
By Reed Abelson
July 3,
2018
As health insurers across the country begin filing their
proposed rates for 2019, one thing is clear: The market created by the
Affordable Care Act shows no signs of imminent collapse in spite of the
continuing threats by Republicans to destroy it.
In
fact, while President Trump may insist that the law has been “essentially
gutted,” the A.C.A. market appears to be more robust than ever,
according to insurance executives and analysts. A few states are likely to see
a steep spike in prices next year, but many are reporting much more modest
increases. Insurers don’t appear to be abandoning markets altogether. In
contrast to last year, regulators are not grappling with
the prospect of so-called “bare” counties, where no carrier is
willing to sell A.C.A. policies in a given area.
“The market is in a better position now than it has ever been
since the exchanges have opened,” said Deep Banerjee, who follows insurers for
S & P Global Ratings. The companies first began selling policies in the
state exchanges, or marketplaces, five years ago. After years of losses, the
insurers are now generally making money.
With roughly a third of states releasing information, the
insurers’ rate requests vary widely, according
to an analysis by the Kaiser Family Foundation. In Maryland,
companies are seeking increases averaging 30 percent. A midlevel policy in
Baltimore could cost $622 a month, roughly a third higher than
the average of the other states reporting to date.
In Minnesota, which created a reinsurance program to help pay
for customers’ expensive medical conditions, carriers are actually seeking
lower premiums. A midlevel policy in Minneapolis is priced at $302 a month.
The political and legal turmoil in the market is likely to
persist, and final premiums will not be established for months. States are
still working out details of some of their proposals to stabilize their own
marketplaces. Those could be blocked by the federal government or a federal
court, as
in the case of last Friday’s decision regarding the work requirement sought by
Kentucky for its Medicaid program.
“We will start seeing
more variation in the coming years, not just in premiums, but what rules the
states are enforcing,” said Cynthia Cox, a policy expert at the Kaiser
foundation.
Insurers are also watching the developments in the Texas lawsuit
brought by Republican attorneys general. The
Justice Department recently sided with the Republican states in
arguing that the provisions protecting people with existing medical conditions
are unconstitutional, which would upend the market entirely.
But for now, insurers are comfortable with the market as it has
come to exist even with less federal support for the law. “The business has
stabilized and we’re confident,” said Brian Lobley, an executive with
Independence Blue Cross, which offers plans in Pennsylvania and New Jersey.
Insurers in Pennsylvania are
seeking average increases of just under 5 percent, according to the
state insurance department. Other states, including Florida, Indiana, Michigan
and Ohio, could also see single-digit increases.
Still, steadily higher prices are driving away more people who
cannot afford those rising costs.
People whose income levels are low enough to qualify for federal
tax credits are largely insulated from price hikes because the credits they
receive increase to cover the higher premiums. Individuals can use the credits
to help pay for their monthly premiums and, in some cases, are able to cover
the entire cost of a plan.
But the number of people buying A.C.A. plans at full price
dropped by roughly 20 percent from 2016 to 2017, according to new federal data.
While some people may have qualified for subsidies for the first time because
of the higher prices, about
1 million people appear to have stopped buying coverage.
Premiums soared an average of about 30 percent in
2018 for those who did not qualify for a federal subsidy. Overall
enrollment has declined from its peak in 2016, according to federal data
released Monday, with 10.6 million customers buying plans in the
state marketplaces for 2018.
Of those, the overwhelming majority — 9.2 million — qualify for
some federal assistance. “The premium tax credits have made the market
extremely resilient,” said Sabrina Corlette, a research professor at Georgetown
University.
The field of fewer customers has not scared off the surviving
companies. Some insurers, ranging from Centene, the market’s largest player
with 1.6 million customers, to Oscar Health, the venture-backed outfit that
struggled in the early years, are expanding next year. More than a dozen
carriers are entering new markets.
“We believe the market is going to be a largely stable market,”
said Mario Schlosser, the chief executive of Oscar, which has watched its profitability improve.
The company wants to nearly double the number of places where it sells
policies, including entering three new states: Arizona, Florida and Michigan.
Nevertheless, Republican efforts to unwind the law are having
some effect. The tax overhaul law eliminated the tax penalty that people face
if they refuse coverage, doing away with the so-called individual mandate that
encourages healthier people to enroll. The administration has also been pushing
the adoption of much cheaper and flimsier policies that compete with A.C.A.
plans by issuing new rules on association plans.
“I have to give a fair amount of credit to the Trump
administration,” said Mike Kreidler, the Washington state insurance
commissioner and a proponent of the federal law. In Washington state, the insurers
want to raise premiums by an average of 19 percent after hiking
prices by 36 percent for 2018. Without the administration’s actions, he said,
rate increases would have been in the single digits for 2019.
In New York state, about half of the 24 percent
increase being sought by insurers is because of the removal of the mandate.
Insurers think fewer healthy people will enroll without a penalty in place,
leading to sharply higher premiums because the remaining pool is sicker.
Most Americans are not affected by the travails of the
individual market. In the much larger employer-based market, where some 150
million people get their insurance, companies generally pay the bulk of the
premium. Underlying medical costs are forecast to
go up around 6 percent next year, in line with recent increases,
according to PwC’s Health Research Institute.
While there is some debate, the
percentage of people who are uninsured appears not to have grown
since Mr. Trump took office: it’s been about 9 percent since 2015.
Depending on where people live, their choice of plans and the
prices they pay will differ dramatically next year. “The experience will be a
hodgepodge across the states,” said Chet Burrell, the former chief executive of
CareFirst, the Blue Cross plan that sells A.C.A. policies in Maryland and
Virginia.
Some states, like Minnesota, where some carriers propose to drop
prices by as much as 12 percent, are setting up a reinsurance program like the
one that had been discussed but not adopted on a federal level. Maryland is
awaiting federal approval for a similar program that could significantly lower
prices in the state.
In Washington state, lawmakers were unsuccessful in their
attempts to create a reinsurance program, said Mr. Kreidler, the regulator. “We
ran into the same problem some other states did — it’s tough coming up with the
money,” he said.
Other states may restrict the sale of policies that compete with
the A.C.A. plans or develop their own version of the individual mandate.
But insurers are increasingly comfortable with the current state
of the market. In Iowa, Medica was the only remaining insurer in 2018
after the
dramatic exit by the state’s Blue Cross plan. The insurer increased
its prices there by nearly 60 percent this year. For next year, it is
contemplating increases in the single digits, and Wellmark, the
Blue Cross plan, said
it would get back into the Iowa market in 2019 after
talking with state officials.
Citing the relative stability in the environment, Medica also
plans to expand into two more states in 2019. It says it is able to factor in
the continued uncertainty over the influx of new competing plans. “We have had
to become pretty nimble and pretty flexible,” said Geoff Bartsh, an executive
with Medica.
Most insurers think the Republicans will not be successful in
their legal efforts to undo the law, and they are holding off on making any
dramatic moves. But that could change if the courts rule in favor of the Trump
administration and the Republican attorneys general. “The big game changer
would be the lawsuit in Texas,” Mr. Bartsh said.
In spite of the market’s rockiness, insurers are discovering
their customers were loyal. “Last time, they tried everything,” said Michael
Neidorff, the chief executive for Centene, including eliminating the subsidies
aimed at reducing people’s out-of-pocket costs if they were low income and
slashing the outreach efforts. But Mr. Neidorff said the vast majority of
people remained enrolled. “People want insurance,” he said.
Those who can afford coverage are also remaining because they
have little choice. “It’s a very price inelastic set of enrollees,” said
Caroline Pearson, a senior fellow at NORC, a research group at the University
of Chicago, who says insurers have become less concerned about the price
increases.
They are resigned to offer coverage in a smaller but stable
market, Ms. Pearson said. “They are a very hardy bunch,” she said. “They have
been through a lot.”
Reed
Abelson covers the business of health care, focusing on health insurance and
how financial incentives affect the delivery of medical care. She has been a
reporter for The Times since 1995. @ReedAbelson
No comments:
Post a Comment