Despite Republican efforts to undermine the Affordable Care Act, insurance premiums will go up only slightly in most states where carriers have submitted proposed prices for next year. And insurance carriers are entering markets rather than fleeing them.
The improvements stem from less political uncertainty over health policy, steeper than necessary increases this year, better understanding of the markets, improvements in care and a host of actions taken by individual states.
Average proposed premiums for all levels of plans in California, Colorado, Delaware, Florida, Indiana, Nevada, Ohio and Pennsylvania will increase less than 9 percent in 2019, according to the Kaiser Family Foundation.
By contrast, this year’s mid-priced plans increased an average of 37 percent nationally compared to 2017.
In some states, 2019 premiums are projected to decrease. Prices also are expected to drop for people in a number of metropolitan areas, including Atlanta, Baltimore, Denver, New York and Washington, D.C.
And unless the Trump administration launches new attacks on the Affordable Care Act in the coming months, analysts believe the average increase across the United States will hold to the single digits.
To be sure, not all areas will fare as well. Some can still expect to see big increases next year, according to the Kaiser Family Foundation. For instance, proposed premium increases in Maryland average 30 percent for 2019.
(In some states, carriers have not yet had to file their rate proposals for 2019, but will in the coming weeks.)
But after a couple years in which carriers fled many markets around the country, insurers are planning to enter exchanges in many states, including Arizona, Florida, Michigan, New Mexico and Wisconsin. In some states, existing insurers are pushing into new areas.
“That they are entering markets is a sign that the insurers are pretty confident about those markets,” said Rabah Kamal, who analyzes health reform and health insurance for Kaiser.
“After several years of big losses, insurers are actually turning a profit,” said Kamal. “They’re doing well, so overall, there’s no justification for big increases.”
To a large extent, premiums in 2019 appear to be moderating because carriers raised rates higher than necessary in 2018 in reaction to the uncertainty over how Congress and the Trump administration might undermine the ACA. “It boils down to the fact that last year’s rates were too high,” said Emily Curran, a research fellow at Georgetown University’s Health Policy Institute.
Carriers also understand the marketplace much better than they did in 2014 when the exchanges were launched across the country, Curran and others say. Carriers have a better sense of who they are covering and how to predict their health risks, Curran said. Insurers and medical providers also have better coordinated care to reduce duplication.
States also have had a major hand in stabilizing their markets, seeking to limit the damage the federal government is doing to the ACA.
Massachusetts had its own individual mandate before the ACA, and now New Jersey does as well. Three states, Massachusetts, New Jersey and New York, have passed outright bans on issuing short-term health insurance policies, while 12 others have adopted standards more restrictive than federal policy. Some states, including Alaska, Minnesota and Oregon, have also created state-funded reinsurance pools, which protect carriers from financially crippling individual medical claims.
Finally, a number of states have done their own outreach to publicize their exchanges and promote enrollment in the absence of federal efforts.
Pennsylvania is one of those states. The insurance market has stabilized there, said Jessica Altman, the state’s insurance commissioner. She projects the average state premium increase in 2019 will amount to 0.7 percent, compared to 30.6 percent this year. She said in 31 of 67 Pennsylvania counties, there will be more carriers selling policies next year compared to 2018. And, she said, many carriers are pushing into new territories.
Her agency estimates that the increase this year would have been only 7.6 percent absent the federal government’s elimination of cost-sharing reductions, which were federal payments to insurance carriers to cushion them from exorbitant individual medical claims.
“We had pretty significant increases last year, and we shouldn’t have,” Altman said.
Julie Mix McPeak, commissioner of the Department of Commerce and Insurance in Tennessee, where premiums are expected to fall and more carriers are intending to operate, said the ACA brought more than 200,000 Tennesseans into health plans — many of whom previously had not sought routine health care — which meant higher claims in the first years.
“We had a pretty negative health score in terms of dollars spent on claims because so many people coming into primary care had health issues that needed to be addressed. Now that they’ve been in care for several years now, we aren’t seeing those claims rising any more. They are leveling off.”
Whether the stability that appears to be settling the markets in 2019 will continue beyond that largely depends on what Washington does. “No one,” said Curran, “wants to see more uncertainty.”
Undermining the ACA
A Brookings Institution study released this month estimated that insurers on the health insurance market this year will enjoy an underwriting profit margin of 10.5 percent, up from 1.2 percent last year.
The study estimated that, absent federal policies disrupting the marketplaces, premiums would have dropped 4.3 percent nationwide in 2019.
Many health care analysts agree. “In cases where we are seeing modest increases, we might have seen decreases,” said Myra Simon, executive director of individual market policy for America’s Health Insurance Plans, a lobbying arm of the health insurance industry.
Steps taken by Republicans in Washington to undermine the exchanges include Congress’ repeal starting next year of the individual mandate, which requires all Americans to obtain health insurance, and the Trump administration’s decision to end the Obama-era cost-sharing reduction payments.
The administration also eliminated most funds for outreach to encourage enrollment in the markets and shortened the periods during which people could sign up for plans. In addition, the administration has moved forward with plans to loosen regulation on association and short-term health plans that don’t have to be as comprehensive as plans sold under the Affordable Care Act.
Health insurance analysts of all stripes had said those actions would draw people away from the insurance exchanges, particularly the young and healthy. Their departure, analysts said, could drive up premiums for all those remaining and set the markets on a “death spiral” that would ultimately drive all carriers from the exchanges.
The president has been clear about his intentions. “Essentially, we are getting rid of Obamacare,” he said in April.
But as carriers file their plans with state insurance offices for next year, it appears that warnings of imminent catastrophe were, at the least, premature.
“The administration has done almost everything on its list to destabilize the market or, in their words, ‘create more choice,’” said Chris Sloan, a director at Avalere Health, a Washington-based health policy research and consulting firm. “They’ve done it all and the market is still standing.”