With premium rate filing season for 2019 health plans under way, research looking into the effects of federal and state policy changes takes on added salience. In CHIRblog’s April installment of What We’re Reading, I dig into reports that highlight 2018 Affordable Care Act enrollment outcomes and policies that will affect 2019, the risks of short-term health plans, the impact of the ACA’s marketplaces on individuals with chronic health conditions, and the rising prevalence of health savings accounts and high-deductible health plans.
Covered California, Individual Insurance Markets: Enrollment Changes in 2018 and Potential Policies That Could Lower Premiums and Stabilize the Markets in 2019. Covered California; April 25, 2018. After efforts, both from Congress and the Trump administration, to dismantle the ACA before the 2018 Open Enrollment period, premiums increased significantly, insurance carriers pulled out of markets around the country, and enrollment numbers slightly decreased. This analysis compares the federally facilitated marketplace (FFM) to state-based marketplaces (SBMs) to observe how federal policies affected enrollment.
What it Finds
- Enrollment in the FFM dropped 9 percent while enrollment in SBMs remained steady.
- The FFM saw a 40 percent decrease in new enrollment
- Early reports indicate that 1.6 million people left the unsubsidized off-exchange market.
- Increasing federal marketing and outreach efforts could lower premiums by 2.3 percent in 2019, and 3.2 percent from 2019-2021.
- New enrollees in California had a risk score 16 percent lower than renewing enrollees.
Why it Matters
Federal policy uncertainty in 2017 left a number of states struggling to ensure that their residents would have at least one carrier offering a plan on the ACA marketplace. This analysis by Covered California shows that funding for marketing and outreach can impact enrollment and premium prices. State-based marketplaces have their own marketing and outreach budgets, which have helped keep enrollment steady, while states that rely on reduced federal government support for such activities suffered a loss in enrollment. Since new consumers are typically healthier than renewing consumers in the marketplace, ensuring that these populations continue to enroll in individual market plans is key to keeping premiums low and preventing carrier exits. Insurers are already making decisions about 2019 participation and premiums, but there are still opportunities for Congress to act to avoid premium increases for consumers.
Pollitz, K. et al. Understanding Short-Term Limited Duration Health Insurance. Kaiser Family Foundation; April 2018. As the Trump Administration moves to expand access to short-term limited duration (STLD) insurance, researchers dive into whether these plans measure up to coverage that is currently compliant with the ACA.
What it Finds
- STLD health plans are not governed by the ACA’s consumer protections, such as the prohibition on health underwriting and cost-sharing limits.
- The difference in medical loss ratios (MLR), or the amount of an individual’s premium that goes toward actual medical care, is significant: ACA plans have an 80 percent MLR versus a range of 50-67 percent MLR in STLD health plans.
- Premiums for STLD health plans are, on average, 20 percent less expensive than the lowest cost ACA-compliant plan, but at a price:
- 62 percent of short-term plans don’t cover mental health or substance use treatment.
- 71 percent of short-term plans don’t cover outpatient prescription drugs.
- Six out of seven short-term plans that cover prescription drugs apply a maximum spending limit of $3,000.
- No short-term plans cover maternity.
- Almost all policies exclude pre-existing conditions, with the exception of one plan offering a $500 allowance.
Why it Matters
In the proposed rule for STLD insurance plans, the Trump Administration intends to make short-term plans available for 364 days, reversing the 90-day limit set by the Obama administration. Allowing consumers to enroll in STLD plans for almost a year, coupled with the repeal of the individual mandate penalty, will make these cheaper plans more attractive than the more expensive and comprehensive ACA-compliant plans. Although these plans are less expensive, they do not cover many critical health services. Additionally, if a person were to get sick, they would likely be unable to renew their plan due to underwriting. Further, the expansion of STLD plans threatens the individual market; while healthy people can opt to purchase cheaper STLD plans, those who are sick, pregnant, or need health services for other reasons will likely stay in their comprehensive ACA-compliant plans. This causes adverse selection, resulting in market instability and rising premiums in the ACA-compliant market. Some states have laws on the books prohibiting the sale of STLD plans, and others limit their duration. State-level regulation and consumer protection will become more important as the market for STLD plans expands under the pending federal policy.
Kapman, M., Long, S., and Bart, L. The Affordable Care Act’s Marketplaces Expanded Insurance for Adults with Chronic Health Conditions. Health Affairs; April 2, 2018. Before the ACA, individuals with chronic conditions experienced significant obstacles to receiving and maintaining health insurance coverage due to discriminatory practices in rate setting, issuance, and benefit design. The ACA greatly expanded access to health insurance for individuals with pre-existing conditions by banning those discriminatory practices. Urban Institute researchers analyzed national survey data to determine the effects of these protections on the coverage status of nonelderly adults with chronic conditions, and how coverage gains impacted the insurance market.
What it Finds
- Between 2012 and 2015, the number of nonelderly adults enrolled in individual market coverage who received treatment for chronic medical conditions increased from 15.8 percent to 21.8 percent.
- On average, marketplace enrollees were healthier than the publicly insured, but sicker and costlier than those with non-marketplace individual coverage and employer-sponsored coverage.
- Nearly all coverage gains among adults who were treated for chronic conditions in 2013 or 2014 can be attributed to increased enrollment in marketplace or public plans.
- In 2014, most marketplace enrollees were previously uninsured, and half of enrollees lacked insurance at some point during the first half of 2014.
Why it Matters
Access to health care is essential for individuals with chronic medical conditions. The ACA greatly expanded coverage for people with chronic conditions who would have been denied health insurance policies or charged exorbitant rates before the law’s anti-discrimination rules took effect. Marketplace enrollees are a demonstrated high-need group when it comes to chronic medical conditions and care. Chronic conditions like hypertension, Chronic Obstructive Pulmonary Disease (COPD), and diabetes need consistent management to avoid costly medical interventions like emergency room visits and surgeries. With a large portion of marketplace enrollees dependent on insurance to manage chronic conditions, the individual market needs healthy people in the risk pool in order to keep premiums stable and low. Recent federal policy changes to dismantle the ACA such as repealing the individual mandate penalty and the expansion of non-ACA-compliant plans threaten to turn the individual market into a high-risk pool for consumers who can’t forgo coverage or rely on skimpy alternative products, causing premiums hikes for those who need health insurance the most.
America’s Health Insurance Plans, Health Savings Accounts and High Deductible Health Plans Grow as Valuable Financial Planning Tools. AHIP; April 12, 2018. Rising concerns over the cost of health care have led more employers to offer health plans with narrow networks or higher cost sharing for the employee. AHIP, the lobbying organization for private insurance companies, looks at the trends and demographics of employees enrolled in health savings accounts (HSAs) and high-deductible health plans (HDHPs).
What it Finds
- Enrollees in HSA/HDHPs increased over 9 percent from 2016-2017; this trend has been on the rise for the past ten years, with only 1 million individuals in HSA/HDHPs in 2005 and over 21 million individuals in 2017.
- 83 percent of enrollees in such plans are in the large group market and get their insurance through an employer.
Why it Matters
Health care costs are the number one issue for Americans. The lower cost of HDHP plans along with the tax savings of an HSA makes them an attractive coverage option for some. An individual can put money into an HSA throughout the year as a pre-tax benefit, and use these savings toward medical expenses incurred before reaching their deductible in an HDHP. However, research has shown that HSAs primarily benefit the wealthy, while that lower- and middle-income families often delay or forego needed care when in a HDHP.