The Patient Protection and Affordable Care Act (ACA) introduced many changes to the individual health insurance market beginning in calendar year (CY) 2014, including new rating rules and federal financial assistance to purchase health insurance through the insurance marketplaces. It is important to understand the condition and stability of the individual health insurance market and how the ACA has affected its health insurance consumers.
To support this understanding, actuaries Paul Houchens, Jason Clarkson, and Zachary Fohl prepared Milliman’s second annual profile of the individual health insurance market for each state along with the District of Columbia (DC). The profile summarizes insurer financials, marketplace enrollment, and federal assistance provided to households purchasing insurance coverage through the insurance marketplaces, incorporating recently released data from the 2018 open enrollment period and early 2018 effectuated enrollment snapshot.
This information is vital for stakeholders for a number of reasons, including:
1. Future legislation or administrative actions. While the pace of new healthcare reform legislation will likely slow in 2018 with the upcoming mid-term elections, data from the individual marketplace can be useful in informing future policy decisions both at the federal and state level.
2. 1332 State Innovation Waiver (1332 Waiver). The information in our state profile reports can enable a state to better understand the funding and coverage requirements that must be adhered to under Section 1332 of the ACA.
3. Marketplace enrollment trends. One important measure of risk pool stability is enrollment.
4. Cost-sharing reduction (CSR) termination. From CY 2014 through the first nine months of CY 2017, insurers received direct federal payments for the cost of providing CSR variants. However, effective October 2017, CSR payments were terminated by the federal government.
To read the full article which summarizes 2018 individual market enrollment and ACA subsidies, click here.
In this report, Milliman’s Paul Houchens, Jason Clarkson, and Jason Melek provide a detailed review of the commercial health insurance industry’s financial results in 2016 and evaluate changes in the market’s expense structure and enrollment prior to relative years. They also provide enrollment and Advanced Premium Tax Credits estimates for 2017.
How much does your state benefit from Patient Protection and Affordable Care Act (ACA) subsidies?
Milliman’s recently published 50-state profile of the individual health insurance market presents nationwide enrollment and subsidy data that can help states better understand the funding and coverage requirements under the ACA. The infographic below sheds light on some of the 2017 results, including marketplace enrollment numbers by state, and a closer look at the ACA cost-sharing reduction (CSR) subsidies—for which government funding is currently under legal challenge.
The Patient Protection and Affordable Care Act (ACA) introduced many changes to the individual health insurance market beginning in calendar year (CY) 2014, including new rating rules and the introduction of federal financial assistance to purchase health insurance through the insurance marketplaces. It is important for state policymakers to understand the health and stability of the individual health insurance market and how the ACA has affected its health insurance consumers.
Milliman actuaries Paul Houchens, Jason Clarkson, and Zachary Fohl have prepared a profile of the individual health insurance market for each state along with the District of Columbia (DC). The profile summarizes insurer financials, marketplace enrollment, and federal assistance provided to households purchasing insurance coverage through the insurance marketplaces, incorporating recently released data from the 2017 open enrollment period.
Policyholders may receive a lower advanced federal subsidy than they otherwise would if they fail to visit the federal health insurance exchange to reenroll or update their financial information, resulting in higher out-of-pocket costs. Milliman actuary Paul Houchens discussed the auto-enrollment process with Trudy Lieberman, and explains how premium trends affect subsidies and out-of-pocket costs in this Rural Health News article.
The actuarial consulting firm Milliman has found that even small premium increases – in the 5 percent range – can lead to out-of-pocket increases of between 30 and 100 percent for those with low incomes if income information is not updated. Data suggest that most individuals with exchange policies have incomes of $25,000 or less and most families have incomes around $50,000, said Paul Houchens, an actuary with Milliman.
Houchens told me several reasons premiums will be higher this year for many exchange buyers. (Some will see decreases.) Insurers, which offered super low rates in the exchanges last year to entice more customers to their plans, are finding they need to increase their premiums. And in many parts of the country the benchmark plan (the second lowest cost silver level policy) on which subsidies are based has changed, meaning higher premiums for some people.
Premiums also go up each year gradually each year you get older. Because the Affordable Care Act allows insurers to charge older people three times more than younger ones, older people will certainly feel the pinch if last year’s subsidy is too low. They might get larger subsidies if they reapply.
This paper provides more perspective on the potential implications for policyholders and insurance companies related to changes in federal subsidies and the renewal process.
The federal health exchange’s automatic reenrollment process was intended to simplify renewing policies. However, auto enrollment could also introduce unpredictability for insurers. This New York Times article examines how these issues will impact the exchange and quotes Paul Houchens offering some perspective in regards to the financial implications.
Here’s an excerpt:
Automatically renewing marketplace plans will be a mistake for many people, but it is an especially risky one for the 85 percent of people who qualified for some sort of subsidy. The Obama administration has chosen not to recalculate the value of tax credits for people who don’t return to the Healthcare.gov site.
If your subsidy should go down – either because you have received a raise since last year or because the benchmark plan in the market became cheaper – you could end up owing the government a lot more money than you think, and you won’t find out until tax time.
…Not everyone has to worry about these invisible price changes, especially if incomes haven’t changed. But in markets where federal rules apply and the benchmark is going down a lot, it pays to return to the marketplace before renewing. Places where that will be an issue include parts of Georgia, Indiana and Ohio – where benchmark prices are declining by more than 15 percent. For people in those areas, returning to the marketplace could prevent a surprise tax bill.
“The structure makes for a very competitive environment among the insurance carriers,” said Paul Houchens, an actuary at Milliman, who estimates that, in some cases, what looks like a 5 percent premium rise could actually mean an increase of more than 30 percent. “But,” he said, “I can see how it would create more confusion for consumers.”
To understand how the reenrollment process will affect premiums and potentially create financial barriers to coverage in 2015, read this healthcare reform paper.