Report highlights commercial health insurance financial results and emerging trends

Medical loss ratio data published by the Centers for Medicare and Medicaid Services (CMS) provides a detailed picture of insurer financial results from the fourth full year of Patient Protection and Affordable Care Act (ACA) implementation. This data, supplemented with CMS marketplace and statutory financial data through calendar year 2018, illustrates continued stability in group insurance markets in terms of both enrollment and insurer financial results. However, the individual market is experiencing declining enrollment outside the insurance marketplaces and yet significantly improved financial results for the insurers relative to 2014 through 2016.

Individual market enrollment declines prompted several state-based initiatives to improve affordability for nonsubsidized consumers. As of April 2018, seven states have received approval from CMS for a Section 1332 State Innovation Waiver for implementing a state-based reinsurance program to improve premium affordability. The impetus for these state-based initiatives, which primarily benefit consumers not qualifying for federal premium assistance, is supported by a number of national enrollment trends.

  • National off-marketplace enrollment for ACA-compliant coverage declined from 4.9 million in 2016 to 2.4 million in 2018.
  • Marketplace Advance Premium Tax Credit (APTC) consumers represented 56% of national ACA-compliant enrollment in 2016, increasing to approximately 70% in 2018.
  • Marketplace APTC enrollment has remained relatively stable from 2016 to 2018, varying from 8.2 million to 8.6 million across the three-year period.

While individual market enrollment continued to decline in 2018, underwriting margins reported in year-end financial statements indicate the health insurance industry’s margins improved. The individual market experienced a nearly 10% underwriting loss in 2015 compared to underwriting gains likely approaching 10% in 2018.

This report, written by Paul Houchens, Jason Clarkson, and Jason Melek, provides a detailed review of the commercial health insurance industry’s financial results in 2017 and evaluates changes in the market’s expense structure and enrollment relative to prior years. It also discusses emerging financial trends for the commercial health insurance markets.