In CHIRblog’s March installment of What We’re Reading, I dive into new research that highlights premium trends from the most recent enrollment period, whether employers will continue offering subsidized coverage to employees, the use of the ACA’s tobacco surcharge in the small-group market, and the early effects of the Trump administration’s health insurance policies on coverage.

Holahan, J. et al. Changes in Marketplace Premiums, 2017-2018. Urban Institute; March 21, 2018. This report analyzes premium changes in all 50 states and D.C., with an in-depth look into 32 markets across 20 states to evaluate trends, policy impacts, and indications for the future.

What it Finds

• Generally, silver-level plans saw greater premium increases than gold-level plans this year, largely due to “silver loading” as a response to the administration cutting cost-sharing reduction (CSR) payments to insurers. Gold-level plans still had, on average, higher premiums than silver-level plans, albeit to a varying extent (a 3-percent difference in the D.C. suburbs versus a 77.4-percent difference in Augusta, GA).
• The factors that contributed to rising premiums in 2018 included the elimination of CSR payments, forthcoming policy changes to reduce enrollment, and adjustments resulting from the prior year’s experience.
• States with Medicaid Managed Care Organizations (MCOs) competing in their individual market had some of the lowest premiums.

Why it Matters

Going into the 2018 Open Enrollment period, insurers faced great uncertainty due to shifting federal policies, causing many to exit the market or reduce their service areas. Although every market had at least one insurer by the time Open Enrollment began, large premium increases and consumer confusion over whether the law remained in effect caused many to predict a subpar enrollment season. Yet most states pulled off similar or better enrollment numbers than last year, with only a 3% drop in enrollment nationally. However, the grassroots efforts that boosted the 2018 enrollment season cannot be relied on long-term, particularly when the individual mandate penalty is zeroed out in 2019. The Urban Institute’s research sheds light on the challenges that lie ahead without federal or state policies to stabilize the market.

Eickelberg, H. “Tipping Points” of Employer-Sponsored Health Insurance. American Health Policy Institute; Mach 23, 2018. This analysis looks at past, present, and future challenges for employer-sponsored health insurance (ESI), and considers the point at which employers may cease offering subsidized health coverage to their employees.

What it Finds

• The “tipping point” for ESI will be when employers face significant financial losses that cannot be passed on to employees through higher premiums, and that are not outweighed by the benefits of providing the coverage, such as recruitment and retention.
• The most significant obstacle to ending ESI is the immediate fallout for employees and high-earning executives, including the increased cost of purchasing comparable individual market plans.
• Current policy proposals such as a public option or single payer health care that could reduce the cost and increase the quality of individual market coverage could have a substantial impact on if and how employers offer coverage as an employee benefit. 

Why it Matters

Today’s employer health care market has fewer insurers and an increasingly consolidated provider market, resulting in more difficult and expensive contracting for employers. When the ACA was implemented, some policy experts thought there would be an historic exit of employers from ESI. While this mass exodus did not materialize, this analysis suggests that there is increasing financial pressure on employers who offer subsidized coverage to employees. Although there are significant barriers to ending ESI, policymakers will have to pay close attention to the effects future policy proposals will have on the employer health insurance market.

Pesko, M. et al. Nearly Half of Small Employers Using Tobacco Surcharges Do Not Provide Tobacco Cessation Wellness Programs. Health Affairs; March 1, 2018. This study examines the uptake of tobacco surcharges, an additional fee tacked on to health insurance premiums for consumers who use tobacco. Researchers found that many small employers using this surcharge do not offer a tobacco cessation program, which is required by law. Others charge higher premiums to tobacco users in states that do not allow the surcharge.

What it Finds

• Only 16.2 percent of small employers have implemented a tobacco surcharge.
• 47 percent of small employers that use the surcharge did not offer tobacco cessation counseling, a requirement under the ACA for charging tobacco users higher premiums.
• 14 percent of employers that use the tobacco surcharge operate in states that prohibit the practice. 

Why it Matters

The ACA allows small-group market insurers to impose an up to 50 percent premium surcharge on tobacco users. However, that surcharge must be accompanied by an opportunity for employees to participate in a tobacco cessation program. Many small employer insurers appear to be out of compliance with this requirement. Additionally, a few states banned the surcharge, citing unaffordable costs for smokers. However, some small-group insurers in these states appear to be imposing the tobacco surcharge, in contravention of state law.

Sommers, B. et al. Early Changes in Health Insurance Coverage Under the Trump Administration. New England Journal of Medicine; March 15, 2018. This analysis of the 2012-2017 Gallup-Sharecare Well-Being Index highlights changes in insurance coverage among adults before the ACA’s marketplace provisions and Medicaid expansion (2012-2013), during the Obama administration’s implementation of the health care law (2014-2016), and in the midst of the Trump administration’s oversight of the law (2017).

What it Finds

• Insurance rates among nonelderly adults increased by 6.3 percent in the last year of the Obama administration, and decreased by 1.3 percent in the first year of the Trump administration.
• Over 20 percent of the coverage gains made between 2013 and 2016 were reversed by the end of 2017.

Why it Matters

This analysis pulls together data demonstrating the detrimental effects of recent federal policy changes. The Trump administration’s public statements about enforcement of the individual mandate, significant cuts to outreach and enrollment efforts, and mixed messaging on the very existence of the health law have reduced enrollment and will likely continue negatively impacting coverage levels across the country, especially in states that also oppose the ACA.