As summer was winding down, CHIR was reading up on the latest health policy research. In August, we read about differences between Medicare Advantage and commercial plans’ negotiated hospital prices, the affordability of employer-sponsored insurance for older adults, and the expected growth of 2024 Affordable Care Act Marketplace premiums.

Mark Katz Meiselbach, Yang Wang, Jianhui Xu, Ge Bai, and Gerard F. Anderson, Hospital Prices for Commercial Plans Are Twice Those for Medicare Advantage Plans When Negotiated by The Same Insurer, Health Affairs. Using 2022 negotiated price data disclosed under the hospital price transparency rule, researchers at Johns Hopkins University evaluated hospital prices the same insurer negotiated for its commercial plans and Medicare Advantage (MA) plans at the same hospitals and identified factors contributing to the price disparities.

What it Finds

• Across all health care service categories, median commercial prices were roughly 1.8 to 2.7 times higher than MA prices.
  • The median commercial-to-MA price ratio was 1.8 for surgery and medical services, 2.4 for imaging services, and 2.2 for laboratory tests and emergency department visits.
  • Commercial prices were over five times higher than MA prices 27.2 percent of the time for laboratory tests, 23.1 percent for imaging, 13.8 percent of the time for emergency department visits, and 6.5 percent of the time for surgery and medicine.
• There was variation in the commercial-to-MA price ratio across states and regions. The highest ratios were seen in Delaware (5.1), South Carolina (4.2), and the District of Columbia (3.1). The ratio was generally highest in the Southeast and lowest in the Pacific Northwest and Midwest.
• All major insurers had median price ratios above 2.0 for most or all categories of services, except for Centene.
• Higher commercial-to-MA price ratios were associated with system-affiliated hospitals.
• Higher insurer market concentrations were correlated with modestly lower ratios; commercial imaging and laboratory service prices were more likely to equal MA prices for the same services in more concentrated insurance markets.

Why it Matters

High hospital prices in the commercial market raise premiums, reduce wages, and drive increases in overall health care spending. Gaps in prices negotiated for MA and commercial plans reflect different incentives and policies that impact each market. For example, the authors cite regulations setting price benchmarks for out-of-network care and competition with traditional fee-for-service Medicare as factors driving down negotiated prices for MA plans, and note how insurers acting as third-party administrators in the commercial market (and thus not bearing the financial risk of the product) may have reduced incentives to negotiate lower hospital prices. The authors also suggest that the high commercial-to-MA price ratios among system-affiliated hospitals indicate that hospital market concentration increases negotiated prices primarily in the commercial market, rather than in MA plans. Finally, this study demonstrates a use of the hospital price data published in accordance with the price transparency rules, underscoring the importance of improving compliance with these regulations and making the data more accessible.

Lauren A. Haynes and Sara R. Collins, Can Older Adults with Employer Coverage Afford Their Health Care?, The Commonwealth Fund. As premiums and deductibles grow at a faster rate than income, researchers, using the Commonwealth Fund’s 2022 Biennial Health Insurance Survey, examined whether employer sponsored insurance (ESI) is adequately protecting older adults (ages 50–64) from high health care costs. 

What it Finds

• Approximately 55 percent of older adults surveyed have ESI, but employer coverage rates varied widely by income; roughly 82 percent of older adults with incomes at or above 400 percent of the federal poverty level (FPL) have ESI, compared to 71 percent of older adults with moderate incomes (200–399 percent FPL) and only 23 percent of older adults with low incomes (below 200 percent FPL).
• Across incomes levels, 28 percent of older adult respondents with ESI reported struggling to afford insurance premiums. This proportion was greater among older adult ESI enrollees with low or moderate incomes—roughly half of those with low incomes and a third of those with moderate incomes reported that it was either somewhat or very difficult to afford the cost of premiums.
• More than a quarter (26 percent) of older adult respondents with ESI, including over half (54 percent) of low-income older adults with ESI, are considered “underinsured,” meaning their insurance coverage does not provide affordable health care access due to high cost-sharing amounts.
• Among survey respondents, almost a third (32 percent) of older adults with ESI and almost half (48 percent) of low-income older adults with ESI faced a cost-related barrier that prevented them from obtaining care in the last year, with respondents reporting access problems such as skipping a recommended treatment or not filling a prescription due to cost.
• Medical bills and medical debt issues plagued 30 percent of all older adult respondents with ESI, 39 percent of those with moderate incomes, and 44 percent of those with low incomes.
  • A substantial share of older adult respondents with ESI who experienced medical bill or debt problems reported long-term financial distress due to medical debt, including credit card debt, a lower credit score, using up all of their savings, or an inability to cover the cost of basic needs, and a majority of these respondents expressed that they were not confident in their ability to retire comfortably.

Why it Matters

Older adults account for a substantial amount of health care spending in the United States, and most adults ages 50–64 are covered by ESI—a market where coverage generosity is eroding. The authors of this study recommend several policies to improve the affordability of care for ESI enrollees: a federal fallback option to close the Medicaid coverage gap, lowering the affordability threshold or raising the minimum value threshold for the Affordable Care Act (ACA) “firewall” that disqualifies workers from Marketplace coverage, creating a public insurance option, using state rate review to slow premium and cost-sharing growth in fully insured plans, and federal legislation requiring employer plans to adjust premiums and cost sharing by income.

Jared Ortaliza, Matthew McGough, Meghan Salaga, Krutika Amin, and Cynthia Cox, How much and why 2024 premiums are expected to grow in Affordable Care Act Marketplaces, Peterson-KFF Health System Tracker. With the ACA Marketplace Open Enrollment Period approaching, researchers at KFF looked at rate proposals and justifications submitted by insurers to identify the potential drivers of 2024 premiums in the individual market.

What it Finds

• The 320 health insurers participating in the ACA Marketplace in 2024 proposed a median 6 percent premium increase, and most insurers proposed between a 2–10 percent premium increase.
• Insurers frequently cited the rising cost of medical care as a significant and even primary contributor to rate increase requests.
  • Rate filings with annualized cost trend reviewed in detail described a median medical cost trend of 8 percent.
• Uncertainty surrounding the COVID-19 pandemic also impacted rate requests. Although changes to the COVID-19 vaccine are likely to increase costs for insurers and subsequently increase premiums, an anticipated reduction in utilization of COVID-19-related prevention and treatment and the opportunity to impose cost sharing on testing will put downward pressure on rates. However, most insurers assigning a premium impact to the effects of the pandemic expect a net reduction in pandemic-related costs and a corresponding (but small) premium reduction.
• Although half of insurers did not mention the “unwinding” of continuous Medicaid coverage in their rate requests, filings that discussed the unwinding usually indicated difficulty predicting what, if any impact it will have on 2024 premiums. However, a small fraction of insurers reported that the Medicaid unwinding would lead to an increase in average market morbidity, causing premiums to rise.
• Recent federal policy changes, including the “family glitch” fix and the No Surprises Act, received little to no attention in the reviewed rate filings.

Why it Matters The rate filings reviewed by KFF researchers reveal not only potential changes in individual market premiums but also dynamics that impact consumers across insurance markets. On the ACA Marketplace, most enrollees receive subsidies that protect them from the full force of rising premiums, but consumers who are ineligible for federal premium subsidies (such as people in the Medicaid coverage gap) could face higher monthly costs for health insurance. Further, projected medical cost increases in the individual market reflect the broader trend of rising health care costs that continues to plague consumers and payers alike. KFF’s analysis also highlights changes in and continued uncertainty concerning the effects of the COVID-19 pandemic on health care utilization and spending. As policymakers look for ways to increase access to affordable health insurance (and health care more generally), insurers’ rate proposals, and helpful summaries of overarching themes in rate filings, can provide insight into relevant policy impacts and market trends.