The Affordable Care Act exchanges have gained solid footing despite threats and efforts to undermine the law from Washington over the past two years, according to a new Urban Institute report funded by the Robert Wood Johnson Foundation.
The paper by the left-leaning think tank showed examples of the stability, including more payers in the exchanges this year and modest premium increases. That followed a year when a handful of companies dropped out and the remaining payers increased premiums significantly.
Now, the individual mandate penalty is gone and short-term plans are an option for nearly all Americans, but payers have figured out how to make the exchanges profitable nonetheless.
The 2018 plan year saw multiple factors working against payers in the exchanges. The Trump administration railed against the ACA and the Republican-controlled Congress attempted to repeal the landmark law.
President Donald Trump also ended cost-sharing reduction subsidies to insurers, which had helped them cover the most expensive members, reduced the open enrollment period and cut back on outreach and enrollment assistance programs. Payers, in turn, instituted noticeable premium increases.
After weathering those storms, insurers are now finding success in the exchanges that is tempting them to enter or return to the marketplace, while others are expanding their footprints.
"In 2019, premium increases were generally low, and in some cases, premiums fell relative to 2018 … The smaller increases in 2019 appear due to insurers over-adjusting for uncertainty and policy changes for the 2018 plan year; in many cases, they appear to have set premiums higher than was necessary. As a result, 2019 premiums were scaled back," Urban Institute said.
Payers continue to explore ways to reduce risk. These efforts include HMOs and narrow provider networks, which limits patient options but helps insurers contain costs.
Urban Institute said payers in the exchanges have struggled with preferred provider organizations. One reason is that those plans are attractive to people with more healthcare needs. "PPO products had a difficult time competing due to higher prices for broader networks. The exception was in rural areas where it is extremely difficult to establish narrow networks because of provider scarcity and consolidation," according to the report.
For 2019, Congress zeroed out the penalty for the individual mandate that required almost all Americans to have health insurance. Plus, the administration expanded short-term plans and association health plans. Those actions are expected to cause people to flee the ACA exchanges.
However, the Urban Institute said most payers don't think those are "attractive" options for many people because the plans don't include the ACA's premium tax credits to help pay for coverage. That said, "the effect of short-term plans is anticipated to increase during the course of 2019 and beyond," according to the report.
The Urban Institute's conclusion echoes other reports over the past year, including a Kaiser Family Foundation brief that found payers returning to pre-ACA levels of profitability, and mirrors successes highlighted in recent earnings reports. Insurers have found their footing and are making money in the exchanges after years of losses.
A better idea of how specific payers are doing should soon emerge. UnitedHealthcare, which has a small ACA footprint, is so far the only major payer to release earnings for the fourth quarter of 2018. Payers with expanding ACA footprints like Centene and Oscar will soon offer their quarterly results.
That won't be a full picture of the marketplace, though. A large portion of the ACA exchange participants are nonprofits, such as Blue Cross Blue Shield and Kaiser Permanente.
Another piece that could affect the exchanges this year is the ongoing government shutdown. Critics fear the stoppage could affect consumer ability to pay for care and premiums, as well as hurt payer bottom lines. Also, the IRS may delay processing the ACA tax credits.