Dive Brief:
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Payers are flocking to Medicare Advantage while fleeing the Affordable Care Act exchanges. The Urban Institute studied the reason payers have stayed in MA and provided a possible model for the ACA marketplaces that uses what’s worked in MA.
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In the paper published on the Robert Wood Johnson Foundation site, the researchers suggested five MA-inspired policies that could stabilize the ACA market.
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The Urban Institute, which backs the ACA, recommended increasing premium and cost-sharing reduction (CSR) subsidies, eliminating short-term catastrophic plans and changing payment rates.
Dive Insight:
Payers, especially national insurance companies, have increasingly left the ACA exchanges and in some cases expanded MA offerings. The Urban Institute looked into what is benefiting payers and creating a stable market.
The Urban Institute said adopting its five policy recommendations would increase enrollment and payer participation in the exchanges, which would lead to strong, stable marketplaces. Many of the recommendations are payment-based or deal with financials, including increasing premium assistance and CSRs, capping provider payment at Medicare rates or a fixed percentage above, standardizing cost-sharing within metal tiers, lifting the budget neutrality requirement for risk adjustment and using a higher benchmark for calculating premium tax credits.
CSR payments to insurers have been a hot topic over the past year. President Donald Trump stopped the payments, which help defer out-of-pocket costs for lower-income members in the exchanges. Congress has discussed the issue and floated a few proposals to address the issue, but so far Capitol Hill hasn't approved funding future CSR payments.
One suggestion from the Urban Institute that goes directly against the Trump administration’s desires is to eliminate short-term plans.
The administration is looking to expand short-term plans, also called catastrophic plans, as a way to provide lower-cost health insurance options in the ACA exchanges. Currently, not many people are eligible to sign up for a catastrophic plan, but the Trump administration would like to open up those plans for more people and extend coverage for a year. Supporters of expanding catastrophic plans say it will give patients more options, but opponents say expanding short-term plans that put more costs on patients could lead to people delaying care.
Bret Schroeder, healthcare expert at PA Consulting Group, recently told Healthcare Dive, “If you’re unemployed and seeing skyrocketing premiums, this is an attempt to get care at lower costs. On the other hand, there’s a slippery slope in terms of the financial impact, which can be significant.”
Despite payers leaving the ACA marketplace, insurance companies that have remained in the market are predicting a better than expected year. Goldman Sachs, S&P Global Ratings and A.M. Best all forecast a fairly positive year.
S&P said most payers in the exchanges have seen gradual underwriting improvement and more insurers will achieve low single-digit margins over the next two years. “Like wine, some insurance markets get better with age. The individual ACA market isn't mature yet, but the experiences from the past four years have helped insurers design and price products more appropriately for the risk in the individual market,” S&P said.
One reason for the positive outlooks is that Congress is not expected to go after the ACA again this year. Also, A.M. Best said payers increasing rates and narrowing provider networks have helped stabilize the market.
A.M. Best also doesn't think losing CSR payments will affect payers much this year. Most payers already received a large portion of the payment for the year and state regulators allowed plans "to adjust premium rates prior to the open enrollment to avoid a potential negative financial impact,” according to report.