Dive Brief:
- As the recently announced 25% average increase for Affordable Care Act health plans puts the question of marketplace sustainability under ever harsher scrutiny, the only answer, for now, is to wait and see through 2017, according to a Wall Street Journal blog by Drew Altman, president and chief executive officer of the Kaiser Family Foundation.
- Altman's argument is a true picture will only emerge during the spring and summer of 2017, when insurers begin to propose their next round of premium increases for 2018, because that is what will reveal whether the marketplaces have stabilized.
- The question is whether the current premium spikes will allow insurers offering marketplace plans to adequately match the risk profile of their enrollees, who have so far proven higher cost than average, to allow more moderate increases going forward.
Dive Insight:
Indeed, the current premium increases were somewhat expected given that prices were set low in the first years of the ACA while insurers had some protection from the federal reinsurance and risk corridor programs, now coming to an end, as examined earlier this year in a study by the Mercatus Center at George Mason University. Furthermore, the Congressional Budget Office had actually predicted prices would land around where they now.
Altman's argument adds next year's quarterly earnings reports will also shed light on whether their rates are yet aligning with their costs, and what their leanings are regarding future marketplace participation.
Even as indications emerge, however, it may remain difficult to get a sense of where the marketplace stands overall due to extreme state and local variation.
"It’s a fair bet that the picture will improve, but it’s hard to predict to what extent, and there is likely to be continued variation in premium increases and plan choice around the country; the ACA is, in effect, 50 different ACAs," Altman wrote.