ACA Marketplaces More Stable After Turbulent 2018

By Susan Rupe InsuranceNewsNet

Consumers had more choices in the Affordable Care Act marketplaces as more insurers participated in the exchanges and premiums showed lower rates of increase – and even some decreases.

That was the word from the Urban Institute, which analyzed the marketplaces in 10 states as part of a study funded by the Robert Wood Johnson Foundation.

The 10 states studied were California, Florida, Georgia, Indiana, Maryland, Minnesota, Ohio, Virginia, Washington, and West Virginia.

Researchers found that insurers were more willing to enter new markets in time for the 2019 enrollment season. This marked a substantial shift from 2018 when political uncertainty and policy changes drove sharp declines in insurer participation.

Following many dramatic marketplace premium increases for 2018, premium growth for 2019 tended to be modest, and even negative in some areas, the researchers found. The 2018 increases were largely attributable to insurers incorporating the costs associated with cost-sharing reductions into their premiums and to the tremendous uncertainty created by other regulatory changes and the political debate surrounding reform.

Insurers appear to be readjusting premium growth in 2019 to account for 2018 overestimates.

The study showed more plans offering narrow provider networks, an increasingly common strategy insurers use to contain costs and limit networks to high-performing providers. Many markets were also dominated by health maintenance organization products offered by Blue Cross Blue Shield affiliates and Medicaid insurers.

The insurance carriers that did well in the ACA marketplace were “the ones who have it figured out,” said John Holahan, Urban Institute fellow. “I think the carriers that didn’t do well in this market have already left the marketplace.”

The 2018 open enrollment season was marked by large premium increases, which may have helped stabilize the marketplace for the 2019 enrollment, he said. “Those large premium increases got insurers to a place of profitability so they were comfortable. So premium increases for 2019 were relatively small. And you had more carriers entering the market and more carriers talking about entering other markets in the future.”

Many of the carriers that were successful were Medicaid insurers, Holahan said. “They can offer relatively low-cost products. And anyone who can figure out a way to develop a narrow network product that can be competitive with them, they’re the ones that are emerging and they seem to be doing well.”

After six open enrollment seasons under the ACA, health insurers who still participate in the marketplaces are hitting the “sweet spot,” where they know how much premium the need to charge and turn a profit, Holahan said.

“It comes down primarily to their ability to negotiate with providers and get enough providers to come in at lower payment rates than in the commercial market. Then they’ll have a big enough network. And for these Medicaid plans that developed networks to participate in Medicaid, it’s not a giant leap for them to participate in the ACA market," he added.

“From a provider point of view, providers are better with getting a lower payment rate than having people go uninsured and not able to pay their bills at all. There are enough of them willing to accept that bargain.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.