- Premiums in the state Affordable Care Act exchanges have stabilized after two years of turmoil stemming from Trump administration policies, a new report by the Robert Wood Johnson Foundation and the Urban Institute concludes.
- More robust reinsurance programs and commercial offerings from insurers such as Bright Health and upstart Oscar are playing a role in the stabilization.
- However, the report cautioned that some states have lax regulatory environments that allow the sale of full-year short term plans and little oversight of health care sharing ministries. Analysts also noted that in less competitive state exchanges, only a public option or a cap on reimbursements for providers may keep premiums stable in the future.
Despite winning control of the White House, Senate and House of Representatives following the 2016 election, Republicans' efforts to repeal the ACA failed. Still, President Donald Trump's administration has made various policy changes to undermine the effectiveness of the landmark health law. Marketing budgets and funding for health plan navigators were slashed, the open enrollment period was cut along with cost-sharing payments made to insurers in order to defray the cost of certain patients.
According to the new report, this not only caused insurers to flee the exchanges — the number of health plans offered per geographical region shrank nearly 20% on average in 2017 — but premiums skyrocketed due to insurer uncertainty about the overall stability of the markets.
However, the markets began to stabilize following another premium increase, according to the analysis. Insurers felt that they had properly priced the market after two years of turmoil.
Also, under the ACA, insurers would have to rebate any premiums due to mandated caps on their medical loss ratios. Moreover, more insurers returned to the exchanges, causing competition to rise. For 2020, there were an average of 3.9 insurers participating per geographic region — actually up from 3.7 in 2016.
As a result, premiums for the lowest-price silver plan dropped an average of 0.4% between 2018 and 2019, and another 3.5% between 2019 and 2020. Premiums rose an average of 7.6% during the Trump administration. In some states, such as Alaska, Arizona, Minnesota and North Carolina, average premiums actually dropped. In Minnesota's case, they fell 11.5%.
However, many more states have seen premiums skyrocket during the Trump years: Kentucky, Wyoming and Iowa saw increases topping 20%. Twenty other states saw double-digit percentage hikes.
The report noted these states had another Trump administration initiative at play: Encouraging consumers to buy plans outside of the exchanges that may have lower premiums but lack many of the ACA-mandated consumer protections. However, rural areas with few competing health plans also saw premiums rise sharply.
The report also noted that premiums could rise again if the recent repeal of the individual mandate penalty by Congress encourages more people to stop buying insurance. It concluded with the following suggestion: "Due to the significant barriers to entry for both insurers and providers in these markets, it is unlikely that competitive pressures will improve the situations. Reducing premiums in noncompetitive markets will likely require introducing a public option and/or capping provider payment rates at levels below those resulting from monopolistic pricing."