ACA about-face: Insurers keeping premium increases lower than last year, RWJF and AP studies find

Credit: healthcare.gov

The Affordable Care Act market has turned around for 2019, according to two studies, and that means premiums are not increasing as much as they did in 2018. 

Unlike last year and in prior years, insurers are expanding their footprint in the ACA market and offering lower premium increases than they did for 2018.

Robert Wood Johnson Foundation's tracking report shows an overall national ACA premium increase of 4 percent, which is below the double-digit increases for this year, according to Katherine Hempstead, senior policy advisory for RWJF.

"What we're seeing this year is an 180 degree turn from last year," Hempstead said. "Carriers are entering the market, and in some states, premiums are going down. Last year we were tracking a lot of exits. This year there's been a lot of entry and expansion."

A study by Avalere Health and the Associated Press has found a 3.6 percent average increase in premiums in 47 states and the District of Columbia, compared to an average 30 percent increase this year.

The insurance marketplace for President Obama's signature healthcare law seems to be stabilizing after at least two years of significant premium hikes, an exodus of insurers that lost money in the exchanges, an uncertain political climate and cuts to stabilization measures such as cost-sharing reduction payments and the individual mandate.

"As there were a lot of exits last year, the carriers that did stay learned how to make money," Hempstead said. "I think they did very, very well."

Insurers are not only staying in the market, but expanding. Nineteen states will either see new insurers enter or expand into more areas, the AP report said.

Last year, CMS Administrator Seema Verma said many counties had only one carrier.

The Robert Wood Johnson Foundation report found this to be turning around in states such as Pennsylvania, where every single carrier except one expanded its territory. The number of counties in that state with only one carrier declined by half, Hempstead said.

Examples include the insurer Oscar Health entering the market in New Jersey and Bright Health offering plans in Alabama and Tennessee.

Last year, Centene expanded its ACA plans to fill coverage gaps. This year, that's happening with insurers nationwide, Hempstead said.

Several factors account for the change.

First, government subsidies have been left in place for lower income consumers to take advantage of tax credits. About 9 in 10 ACA beneficiaries get government subsidies.

While the Centers for Medicare and Medicaid Services, under the Trump Administration, has cut ACA marketing promotion, funds for navigators to help consumers enroll, and has shortened the open enrollment period, the agency has also made decisions that have helped insurers, Hempstead said.

The most significant is the announcement by Health and Human Services Secretary Alex Azar this past June. Azar said insurers would not be prohibited from using silver loading, at least for 2019.

Under silver loading, insurers apply the full premium increase to silver marketplace plans to make up for the loss of cost sharing reduction payments.

President Trump eliminated the CRS payments that insurers use to reduce deductible and other out-of-pocket expenses for consumers who qualify.

For the 2018 premium year, the CSRs were gone, but insurers were still required under the ACA to help subsidize the out-of-pocket expenses for lower-income beneficiaries.

Most states, all but North Dakota and Vermont, as well as the District of Columbia, allowed insurers to amend their rates for 2018 to account for the lost CSR funding, according to Health Affairs.

This August, CMS issued new guidance for insurers to load the cost-sharing reduction payments onto their silver plans.

This increases the tax subsidy and since a beneficiary can use their tax credit to purchase any metal tier except a catastrophic plan, many are able to enroll in bronze or gold plans at a lower cost.

"The way they load CSRs on silver premiums, it makes subsidies more generous," Hempstead said. "It has actually has improved the market."

However, consumers who make too much money to qualify for a tax credit pay the full price of silver loading.

"The unsubsidized part of the market has not been as well served," Hempstead admitted.

Another move by CMS that has allowed insurers to decrease their premiums has been the use of 1332 waivers. The waivers allow states to set up a reinsurance program for insurers to submit their high claims into the risk pool. 

The health insurance tax is on hold for 2019, though could affect premiums for 2020, if it is reinstated.

Also, the political climate for the market has stabilized, Hempstead said. Congress under President Trump tried unsuccessfully to repeal and replace the ACA. Those efforts appear to be on a back burner especially going into the November midterm elections.

The only current threat to the ACA is a Texas court case over whether the loss of the individual mandate derails the entire ACA.

"In terms of Congress, a legislative take-down seems unlikely this year," Hempstead said.

Obamacare is popular.  The ACA put the concept of coverage of pre-existing conditions on the map, she said. Which is why she doesn't see the new policy allowing for consumers to get short-term plans for up to a year to get real traction for the majority of consumers who get ACA subsidies.

Open enrollment for most states is November 1 through December 15, except in California, Rhode Island, Minnesota, Massachusetts and Washington, D.C. that extended the deadline, according to healthinsurance.org.

Some consumers could qualify for a special enrollment period due to life-changing events such as getting married or having a baby.

State run exchanges also have some flexibility in the schedule.

In 2014, when the ACA was implemented, open enrollment lasted six months before being cut down to three months.

An estimated 11 million people rely on the ACA for insurance coverage.

"I think this market can grow, but it can't grow infinitely," Hempstead said. "I think we have to take the market one year at a time."