Uncertainty about how long the White House will subsidize insurers’ participation in the Affordable Care Act (ACA) has trickled down to the states. This has resulted in several states pushing back deadlines for insurers to submit rates for plans in 2018. These states have pushed insurers' deadlines because the insurers need more time. (The states approve rates based on what insurers submit. Insurers then use those approved rates to calculate premiums.) For example, Colorado, New Hampshire, Oregon and Kentucky have obliged insurers’ requests for extended deadlines to submit rates for 2018 ACA health plans.
Insurers’ apprehensive approach to pricing 2018 plans stems from not knowing whether certain ACA provisions will remain next year. Their two main concerns are:
- Will the Trump administration enforce the mandate requiring most people to enroll in coverage?
- Will the administration fund the subsidies that lower the cost of insurance for most marketplace enrollees?
If the subsidies go away, insurers don’t see how they can continue in the individual market. Both of these scenarios create the possibility of the health insurance exchanges entering a “death spiral.”
Insurers want certainty
Having a clear regulatory framework is very important to insurers. Some have already threated to pull out of the individual marketplace if they don’t see a clear regulatory framework soon. National insurers Aetna, Humana and UnitedHealth Group have scaled back participation or exited the exchanges completely. Other insurers such as Anthem, Cigna Corp. and Molina Healthcare have been reluctant to commit. Recently, in Ohio, Anthem withdrew plans from the state exchange. This will leave Ohio consumers in 18 counties unable to buy insurance in the system created under the ACA.
Earlier this year, Wellmark Blue Cross and Blue Shield and Aetna announced that they would stop selling ACA-compliant plans in Iowa for 2018. That would make Minnesota-based Medica the only insurer in most Iowa counties, and Modica hasn't yet decided whether to continue selling plans. Thus Iowa is facing the possibility that it may not have insurers willing to sell plans in the individual insurance marketplace.
Iowa lawmakers recognized that they might not have insurers selling plans next year. In an effort to curb that possibility, they asked the federal government to let them alter parts of the ACA. This measure is called the “stopgap measure.” At least one carrier, Wellmark Blue Cross and Blue Shield, has said it would re-enter Iowa’s individual marketplace and offer plans in all of the state’s 99 counties if the measure is approved “in a timely manner.”
Rapidly rising rates
In states that have submitted rate requests already, we are seeing rates climb. For example, in Oregon, in the individual market, eight companies submitted average rate change requests ranging from a 6.9 percent to a 21.8 percent increase. In the small group market, 10 companies submitted average rate requests ranging from a 2 percent to an 8.5 percent increase. In the Oregon exchanges, the insurers have posted rate increases for premiums that range from single to double digits.
Insurance companies are required to file rates assuming that cost-sharing subsidies will be paid and that the ACA will continue to be in place in its current form in 2018. Understandably, insurers are hesitant to file rates because they can’t assume that cost-sharing subsidies will be guaranteed.
At a Bipartisan Policy Center event focused on the individual insurance market and attended by NPF staff, Blue Cross and Blue Shield of North Carolina CEO Brad Wilson stated that out of the 22.9 percent insurance increase, 17 percent was due to the uncertainty about the ACA’s Cost Sharing Reduction payments, health insurance tax, reinsurance and the individual mandate.
Wilson estimated that if the market were stabilized, the rate increase would have been 8.8 percent. He also said you can’t stabilize the marketplace at the expense of affordability.
With this uncertainty, all we can do is stay tuned for what will happen next in Washington, D.C. In the meantime, check out our new Advocacy site for ways to get involved with us regarding these issues.
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