Premiums in 2018:
What to Expect
Commonwealth Fund Teleconference
June 12, 2017
Marketplace Premiums and
Insurer Participation: 2017
Experience and 2018 Projections
Sara Collins, Ph.D.
Vice President, Health Care Coverage and Access
Commonwealth Fund Teleconference: Premiums in 2018: What to Expect
June 12, 2017
20%
-20%
Indiana
Massachusetts
Rhode Island
Arkansas
Ohio
New Hampshire
Washington
Vermont
North Dakota
Michigan
New Jersey
Nevada
Wyoming
Virginia
California
Texas
Missouri
Florida
Georgia
Connecticut
Wisconsin
Louisiana
Kentucky
Colorado
Delaware
Oregon
Maine
Iowa
Utah
Maryland
District of Columbia
Mississippi
Idaho
New Mexico
Alaska
South Carolina
West Virginia
Hawaii
South Dakota
Montana
North Carolina
Illinois
Nebraska
Kansas
New York
Pennsylvania
Minnesota
Alabama
Tennessee
Oklahoma
Arizona
EXHIBIT 1
Percent Change in Average Monthly
Premium for Second-Lowest Cost Silver
Plan for a 27-Year-Old, 2016-2017
Percent Change
120%
No Medicaid Expansion
Medicaid expansion
State-based exchange
100%
80%
60%
40%
Median = 20%
0%
Source: The Commonwealth Fund and NORC analysis of the Robert Wood Johnson Foundation’s HIX Compare 2014-2017 dataset
EXHIBIT 2
Counties With One Insurance Carrier, 2017
Source: A. Semanskee and C. Cox, “Insurer Participation on ACA Marketplaces, 2014-2017” Kaiser Family Foundation,
June 1, 2017
EXHIBIT 3
2017 Premium Increases Likely a
One-Time Correction
• Reinsurance program phased out: Temporary program for three
years, to reimburse insurers for the cost of individuals who have
unusually high claims.
• Risk pools became known: Insurers had more knowledge about
enrollees after 3 years and adjusted prices.
• Under pricing in 2016: Many markets with the largest increases had
below average prices in 2016.
Commonwealth Fund Teleconference | June 12, 2017
5
EXHIBIT 4
2017 Markets with One Insurer:
Key Factors
• Stiff price competition.
• Risk corridor payments curtailed.
• Consolidation pre-ACA.
• Low enrollment in some markets
• Rural status
• State approach to outreach and enrollment.
Commonwealth Fund Teleconference | June 12, 2017
6
EXHIBIT 5
S&P Projections for 2017 Individual
Market, April 2017
• Signs of improvement, with most insurers reporting
better 2016 results compared to 2015.
• 2016 and 2017 enrollment indicate that the ACA
individual market is not in a “death spiral.”
• Insurers on average will report closer to break-even
margins in 2017.
Source: Deep Banerjee “The U.S. ACA Individual Market Showed Progress in 2016, But Still Needs Time to
Mature,” S&P Global Market Intelligence (Apr 2017).
7
EXHIBIT 6
S&P Projections for 2018 Individual
Market, April 2017
• 2018 premiums are projected to increase by far less
than in 2017.
• Most counties will have at least 1 insurer in the
marketplaces.
• More insurers will report positive (low single-digit)
margins.
• ACA individual markets remain in early stage of
development: they need certainty to stabilize.
Source: Deep Banerjee “The U.S. ACA Individual Market Showed Progress in 2016, But Still Needs Time to
Mature,” S&P Global Market Intelligence (Apr 2017).
8
EXHIBIT 7
2018 Individual Health
Insurance Market Rate Filings
Cori E. Uccello, MAAA, FSA, FCA, MPP
Senior Health Fellow
American Academy of Actuaries
Commonwealth Fund Briefing: 2018 Health Insurance Marketplaces—What States, Insurers,
and Consumers Should Expect
© 2017 American Academy of Actuaries. All rights reserved.
May not be reproduced without express permission.
June 12, 2017
EXHIBIT 8
Premium components




Who is covered – the composition of the risk pool
Projected medical costs
Other premium components—administrative costs,
taxes, profit
Laws and regulations
© 2017 American Academy of Actuaries. All rights reserved.
May not be reproduced without express permission.
EXHIBIT 9
Major drivers of 2018 premium changes


Underlying growth in health care costs (medical trend)
Changes in the risk pool composition and insurer
assumptions


Legislative and regulatory uncertainty




Impact of recent regulatory changes (e.g., shortened open
enrollment period, tightened SEP verification requirements)
Whether cost-sharing reductions (CSR) will continue to be
funded
Whether the individual mandate will continue to be enforced
Whether a state has implemented a reinsurance or
high-risk pool program
Resumption of the health insurance tax
© 2017 American Academy of Actuaries. All rights reserved.
May not be reproduced without express permission.
EXHIBIT 10
What is necessary for a stable and sustainable
individual health insurance market




Individual enrollment at sufficient levels and a balanced
risk pool
Stable regulatory environment that facilitates fair
competition
Sufficient insurer participation and plan offerings to
provide insurer competition and consumer choice
Slow spending growth and high quality of care
© 2017 American Academy of Actuaries. All rights reserved.
May not be reproduced without express permission.
EXHIBIT 11
Recent Academy publications

Drivers of 2018 Health Insurance Premium Changes
(forthcoming)

Steps Toward a More Sustainable Individual Health
Insurance Market
http://www.actuary.org/files/publications/Sustainable_Health_Insurance_Marketplace_042417.pdf

An Evaluation of the Individual Health Insurance
Market and Implications of Potential Changes
http://www.actuary.org/files/publications/Acad_eval_indiv_mkt_011817.pdf

Using High-Risk Pools to Cover High-Risk Enrollees
http://www.actuary.org/files/publications/HighRiskPools_021017.pdf
© 2017 American Academy of Actuaries. All rights reserved.
May not be reproduced without express permission.
EXHIBIT 12
Commonwealth Fund
Teleconference
2018 Health Plan Rate Submissions:
Effects of Policy Uncertainty
June 12, 2017
Sabrina Corlette, J.D.
EXHIBIT 13
Running Down the Clock: Effects of
Policy Uncertainty
Rate Review: A Key Consumer Protection
•
State rate review: purpose & scope
•
The rate review calendar
•
Flexible, within limits
•
Risks and benefits for consumers
EXHIBIT 14
Early rate filings: What are insurers
saying?
Impact of policy uncertainty
•
•
Premium adjustments
•
CSRs
•
Individual mandate enforcement
•
“Awareness” of insurance options
Participation at risk
EXHIBIT 15
Future of the ACA’s Marketplaces
Consequences for consumers
•
Reduced choices
•
Higher prices
•
Worst case: no coverage at all
EXHIBIT 16
Thank you!
Sabrina Corlette, J.D.
Research Professor
Georgetown University Center on Health
Insurance Reforms
[email protected]
@SabrinaCorlette
202-687-3003