A new brief issued by the Kaiser Family Foundation analyzes financial data for the first six months of 2018 to determine how the individual insurance market has responded to changes made under the Trump administration that tended to destabilize the Affordable Care Act (ACA). The good news is that insurers in the individual market are showing a profit, even returning to levels not seen since before 2014 when new ACA insurance market rules took effect. The bad news: The future is murky due to the repeal of the individual mandate penalty that is part of tax reform legislation and the Trump administration’s decision to expand the sale and renewal of short-term, also known as “skinny,” insurance plans.
The financial outlook for insurers in the individual insurance market looks promising, according to a new brief issued by the Kaiser Family Foundation.
Despite the fact that the Trump administration has made policy changes that had the potential to destabilize the market, the latest financial data from the first six months of 2018 indicates that insurers in the individual market are regaining profitability, according to the report.
Indeed, insurers reported better financial performances in the first six months of 2018 than in all the earlier years of the ACA.
“Insurer financial results from 2018–after the Administration’s decision to cease cost-sharing subsidy payments, but before the repeal of the individual mandate penalty in the tax overhaul goes into effect–showed no sign of a market collapse,” according to the report.
Explanations for the improvements in the market were premium increases in 2018 and simultaneous relatively slow growth in claims for medical expenses. The premium increases were in large part to compensate for policy uncertainty and the termination of cost-sharing subsidy payments. “Without these policy changes, it is likely that insurers would generally have required only modest premium increases in 2018,” the brief said.
Although it seems as if the market on average is stabilizing, the Kaiser Family Foundation brief said the future is uncertain. Repeal of the individual mandate penalty takes effect in 2019. And the expansion of the skinny plans could cause healthy enrollees to leave the ACA-regulated individual market.
“These changes will increase uncertainty for insurers and push premiums up, but premium increases on average for 2019 are still likely to be modest due to the fact that insurers over-corrected with previous rate hikes and therefore cannot justify substantial further increases. If not for these policy changes, it is possible that premiums on average could be flat or even decreasing in 2019,” the report said.
Interested in learning more? Oftentimes, the best way to learn how other plans are adapting to the government and market changes is to attend a live conference and hear from peers about their approaches and strategies. Check out our upcoming live event The 12th Risk Adjustment Forum for strategies to improve risk adjustment programs for Medicare Advantage, Medicaid, and Commercial Plans.