Despite concerns that recent White House administration’s actions would undermine the Affordable Care Act (ACA) market, the individual insurance market is still going strong, according to a new report by the Kaiser Family Foundation ((KFF). New data from the first three months of 2019 indicates that insurers in the individual insurance market are profitable, even with average premiums falling for the first time since the health care reform law was implemented.
The KFF issue brief notes that 2018 was the most profitable year for the individual market insurers since the ACA took effect. This profitability occurred even though the Trump administration stopped cost-sharing payments, which led to substantial increases in health plan premiums, and expanded the sale and renewal of skimpy plans that are less expensive than plans in the ACA marketplace but don’t cover as many medical services.
The financial data from the first quarter of 2019 indicates that insurers in the individual market remain profitable. KFF looked at two metrics— loss ratios (the share of health premiums paid out as claims) and average gross margins per member per month. These two metrics were analyzed with insurer-reported financial data from Health Coverage PortalTM, a market database maintained by Mark Farrah Associates, which includes information from the National Association of Insurance Commissioners. Loss ratios for the first quarter of 2019 rose to 73 percent. Although 2019 annual loss ratios will likely be higher than that, analysts said it is a sign that individual market insurers on average are on a path toward sustained profitability. Gross margins show a similar pattern.
“Taken together, these data suggest that the individual market risk pool is relatively stable, though sicker on average than the pre-ACA market, which is to be expected since people with pre-existing conditions have guaranteed access to coverage under the ACA,” the issue brief said.
Meanwhile, insurers are beginning to file proposals for modest premium increases in 2020, ranging from an average 3 percent decrease in Maryland to a 13 percent increase in Vermont. Although the future of the ACA remains uncertain, KFF concludes that earlier concerns that the market would collapse or insurer exits would leave counties with no coverage options at all have proven to be unfounded.