Policies to strengthen nongroup insurance markets could fix ACA problems

Enrollment and stability in the nongroup insurance market continues to be threatened by the uncertainty of support for the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Faced with the concerns in this environment, the Robert Wood Johnson Foundation and Urban Institute issued a report, Stabilizing and Strengthening Nongroup Markets, expressing the opinion that “[t]argeted policies could fix the ACA’s problems without sacrificing its gains in coverage, affordability, and access to care.” The report identifies policies that would stabilize the nongroup insurance markets, encourage insurer participation, improve affordability, and rein in premium growth. Some policies would be implemented immediately and others would be implemented in the long term; however, solving the problems will take significant political action.

“Strategies that increase the buying power of enrollees and increase enrollment would make participation more attractive to insurers.” To strengthen ACA marketplaces, the report suggested that policymakers learn from the Medicare Advantage and Medicare Part D markets that successfully compete with the traditional Medicare program.

The current climate

The report pointed out that neither Congress nor the Trump Administration has committed to paying cost-sharing reductions, and the administration signaled it does not intend to enforce the individual mandate penalties. Open enrollment periods have been shortened and federal outreach and enrollment funds will be cut 40 percent in the Navigator program, while the ACA advertising effort will be cut 90 percent. In addition, HHS will limit access to healthcare.gov every week during the 2018 open enrollment period. Such actions will reduce coverage.

Short-term commitments

According to the report, the federal government must commit to (1) reimbursing insurers on an ongoing basis for cost-sharing reductions; (2) enforcing the individual mandate penalties; (3) increasing funding for outreach and enrollment assistance; and (4) permanently reinstating a government-funded reinsurance for nongroup markets.

Long-term commitments

Long-term recommendations addressed in the report include strengthening marketplaces, expanding coverage, reducing premiums and cost-sharing requirements, and encouraging the broadest range of insurers to participate. In addition, the federal government should permit states to expand Medicaid, eliminate non-ACA-compliant nongroup insurance products, and reverse current administrative decisions that hinder enrollment. The report noted that the lack of insurer competition is associated with higher benchmark premiums because it eliminates insurer negotiating leverage.

The report suggests that improving affordability would increase coverage, reduce the number of people uninsured, and bring more healthy enrollees into the insurance pool, lowering average premiums. Other long term policy recommendations include providing additional financial assistance to lower premiums and cost-sharing requirements for nongroup coverage, attaching premium tax credits to gold rather than silver plans lowering out-of-pocket costs for all enrollees receiving tax credits, and increasing cost-sharing subsidies for people with lower incomes.

Additional policies

To strengthen the nongroup insurance market, the report described three additional policies:

1. Benchmark premiums. Changing the way benchmark premiums are calculated affects the size of nongroup premium tax credits allowing people to choose from more plans without additional premium contributions.
2. Capping payment rates. Payment rates charged to nongroup insurers by health care providers could be capped, making it easier for insurers to enter new marketplaces and counteracting provider monopolies.
3. Standardize insurance options sold in the nongroup market. Standardizing the insurance options sold in the nongroup market could reduce the complexity of the enrollment process, improving comparability and facilitating price competition.

According to the report, “nongroup insurance markets must become larger, less expensive for consumers in both premiums and out-of-pocket costs, and less financially risky for insurers.”

Highlight on Idaho: Premiums are higher, but state retains five insurers on exchange

Health insurance rates are increasing by 24 percent in Idaho for 2017, according to the state’s Department of Insurance (DOI). The increases affect both individual and small group health plans and follows the trends seen across the country.

Rising premiums

On Idaho’s health insurance exchange, where 95,000 state residents are enrolled and 90 percent are eligible for a premium tax credit under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), consumers may chose form five carriers and 196 medical plans, depending on the part of the state. The DOI reported increases in all plans. Weston Trexler, DOI product review bureau chief, told KTVB that the growing premiums are driven by claims.

“Anytime that an insurance company is paying out more claims than premium collected, they’re operating at a loss,” Trexler said. “Claims in this new marketplace have been higher than the carriers originally expected.” Trexler also noted that costs for services and rugs go up every year, and health insurance premiums must change to account for the increase.

Rate review

The DOI stated that carriers filed initial requests for rate review in May but were allowed to submit revised requests based on federal risk adjustment payment requirements released in July. From there, the DOI took public comment and determined whether the requested rate increases were reasonable based on claims experience, premiums, network provider agreements, administrative, and other costs. Most carriers agreed to reduce their revised requests after they had been reviewed, and the DOI could not find the rate increases unreasonable.

“While other states have seen dramatic reduction in carriers participating on their health insurance exchanges, the good news for Idaho is that we continue to have robust choice with five carriers and 186 medical plans in Idaho with at least four companies in every county,” said DOI Director Dean Cameron. “More choice leads to more competition, which should lead to lower premiums.