Dive Brief:
- The Mercatus Center at George Mason University has released a new study that reviews insurers' performance selling Affordable Care Act (ACA) Qualified Health Plans (QHPs) across carriers and states in 2014, noting the data for 2015, once available, are likely to lead to similar conclusions.
- Its overall takeaway is insurers lost significant money on a per-enrollee basis even though they received more support from the ACA's reinsurance program than they projected when they set their premiums.
- The report also concluded if there hadn't been a reinsurance program, insurers would have had to set their premiums at least 26% higher on average to have prevented losses in 2014.
Dive Insight:
Overall, the ACA's qualified health plans have not yet achieved a balanced enough risk pool to allow the individual market to stabilize, even with the help of the premium stabilization programs, the study found.
The Mercatus Center, which plans to follow up with further analyses, aims to provide critical information to inform discussion regarding the ACA's impacts and future, including that of the health law's premium stabilization programs. It asks, "As the end of the reinsurance and risk corridor programs approaches, and insurers face the reality that premiums for the first time must cover expenses, a key question emerges. Can insurers that continue offering QHPs reverse their losses through some combination of higher premiums and plan redesign, or are the ACA’s provisions unsustainable and in need of change?"
The report highlighted additional key points, including that insurers' 2014 losses exceeded $2.2 billion despite net reinsurance payments of $6.7 billion, or $833 per enrollee--an amount 40% higher than expected when insurers set their premiums.
It also finds that insurers with narrow provider networks did better than those with broad networks, and suggests this could be due to healthier people gravitating toward plans with broader networks, or to increased utilization management by insurers with narrower networks.