- The Affordable Care Act (ACA) health insurance exchanges will have some key differences next year. Health insurance companies have faced various obstacles when selling health plans through the exchanges. These challenges include a higher risk pool than previously anticipated, the costs associated with covering preventive care, keeping young adults on their parents’ health plans until 26 years of age, and providing coverage to members with pre-existing conditions.
One solution that health plans have implemented for 2017 is to raise the costs of monthly premiums to cover the spend associated with the ACA health insurance exchanges. In October, the Department of Health & Human Services (HHS) released a report showing that monthly premium prices will rise an average of 25 percent in 2017 on the federal exchange. State-based marketplaces will see a 22 percent rise on average next year.
The conclusion of the reinsurance program under the Affordable Care Act also likely played a major role in the rising premium costs in the public health insurance marketplace.
The HHS report shows that 72 percent of consumers currently enrolled in health plans through the exchange will be able to find a plan for $75 or less per month in 2017 due to ongoing tax credits. Also, consumers who re-enrolled in a health plan by selecting the lowest-cost plan could actually reduce their monthly premium costs by 20 percent next year.
“If all consumers switched from their current plan to the lowest premium plan in the same metal level, the average 2017 Marketplace premium after tax credits would be $28 per month less than the average 2016 Marketplace premium after tax credits – a 20 percent reduction,” the report states. “All consumers will have a choice of plans and on average consumers will have 30 plans to choose from, including 14 silver plans and 10 bronze plans.”
This shows that the increase in premium cost may not lead a reduction in member retention among health plans. Due to the tax credits, the multiple options available, and the individual mandate for the near future, payers are likely to still have high patient volumes to manage in 2017.
Another change for 2017 on the health insurance exchanges will be the pullback seen from various payers that have decided to drop out of a number of state-based marketplaces. UnitedHealth and Aetna are the biggest health payers pulling back from the health insurance exchanges.
For the federal marketplace, the number of insurers will hit an average of 3.9 across the states in 2017, which is a decline from 2016’s 5.4 payers, according to a study from the Henry J. Kaiser Family Foundation.
UnitedHealthcare, Aetna, Blue Cross Blue Shield of Minnesota, and Humana are some of the payers that have dropped out or pulled back from the health insurance exchanges. When UnitedHealth predicted a loss of $275 million in 2016, the payer announced last year its plan to discontinue selling products on the exchanges. Aetna saw a $300 million deficit in 2016, which impacted its decision to pull back as well.
“Fifty-five percent of our individual on-exchange membership is new in 2016, and in the second quarter we saw individuals in need of high-cost care represent an even larger share of our on-exchange population. This population dynamic, coupled with the current inadequate risk adjustment mechanism, results in substantial upward pressure on premiums and creates significant sustainability concerns,” Aetna CEO Mark Bertolini said in a public statement this past August.
Humana saw about $1 billion in losses operating through the exchanges over the last several years, which is why the payer is pulling back from about half of the state-based marketplaces and will be selling plans in no more than 11 states in 2017.
The major changes for the health insurance exchanges will revolve around rising premium costs and a drop in the number of payers participating next year.