by Robert King | Oct 31, 2019 4:51pm
The
Affordable Care Act’s (ACA's) insurance exchanges are the most stable they have
been in years, but questions remain on whether the market’s enrollment can
grow.
Open
enrollment for the 2020 coverage year starts Nov. 1 and runs through Dec. 15,
and premiums for the benchmark plans on the federally run HealthCare.gov are
expected to decline by about 4%. Experts say that while enrollment growth
appears to have plateaued, there are areas that could lead to more customers.
“It is
not a growing market,” said Chris Sloan, associate principal for the consulting
firm Avalere. “Don’t expect the core group of beneficiaries to change in the
coming years.”
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The
main reason for the lack of growth is the high premiums for the unsubsidized
population on the exchanges.
As of
March 2019, there were 10.6 million customers on federal and state-based
exchanges, and 87% of those got a tax credit to lower costs, according to a
Centers for Medicare & Medicaid Services report.
The
unsubsidized population has steadily declined on the exchanges rapidly over the
past several years. From 2016 to 2018, the unsubsidized population declined by
40% as 2.5 million unsubsidized customers fled.
The
biggest headwind for growth on the exchanges is still “affordability for
unsubsidized people,” said Katherine Hempstead, senior policy advisor for the
Robert Wood Johnson Foundation. “The plans are so expensive."
It also
remains unclear what can be done to reverse the affordability issue with
unsubsidized customers.
“There
will have to be a fundamental policy change to that market to fix that
dynamic,” Sloan said.
Growth potential
But
experts were optimistic about areas that could spur some growth.
Chief
among them is a rule the Trump administration finalized back in June to expand the use
of health reimbursement arrangements (HRAs). The rule would reconfigure
Obama-era regulations that would limit the use of HRAs starting in January
2020.
The new
rule could lead to more employers subsidizing their workers to get an exchange
plan.
“The
attraction for an employer is they can give you a fixed amount of money and
raise it every year and say go buy insurance,” Sloan said. “That is the
attraction for the employer and for the employee: It is an HRA, so it is
tax-exempt.”
However,
individual market coverage usually has higher cost-sharing than an
employer-sponsored plan, so some employees can lose out, he added.
“Nobody
knows whether or not that is going to be a big deal. But that could be a
consequential source of growth for the individual market,” Hempstead said.
State initiatives
Insurers
should also keep an eye on several state initiatives aimed at lowering the cost
of insurance.
Chief
among them is a new law in California that would raise the income eligibility
for getting subsidies from 400% above the federal poverty level (FPL) to 600%
above the FPL starting next year.
States
are also exploring waivers to set up reinsurance programs and to create their
own insurance exchanges.
“I
think that some of the states are really stepping up to play a more active
role,” Hempstead said. “Nevada has a state exchange, and New Jersey and
Pennsylvania are applying. The business case is a lot stronger because the
technology is pretty matter of fact and a lot less expensive. You can
administer the marketplace and beat the rate that you have to pay the federal
government, so it makes sense.”
Insurers
could also see the marketplace as a strategy to increase their business in
other segments, such as Medicare Advantage (MA).
“The
ACA marketplace, there is a lot of older adults in that marketplace,” Hempstead
said. Insurers that may think they are in MA could go into the exchanges “and
acquire some customers and keep them into MA.”
But
with the ACA, there is always the chance for political volatility. There is a
case working its way through the courts called Texas v. Azar that would
dismantle the entire ACA, and if President Donald Trump wins reelection and
Republicans retake the House in 2020, they could try again to repeal the law.
Volatility,
however, has become the norm for the exchanges, and insurers appear to be used
to it, Sloan said.
“We’ve
been through this multiple times,” he said. “Insurers will price in volatility
and that has been the case for multiple years.”
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