Average ACA premiums will drop for first time in 2019
Premiums for the second-lowest cost silver plans in the Affordable Care Act federal exchanges will drop by an average of 1.5% in 2019, CMS said Thursday.
The drop could be a market correction, after payers implemented huge hikes over the past two years as President Donald Trump and Republicans on Capitol Hill attempted to repeal the ACA. Trump portrayed the ACA exchanges as in a "death spiral," contributing the marketplace unease.
- Meanwhile, Centene announced this week it is expanding its 2019 exchange presence in six states and entering the market in another four: Pennsylvania, North Carolina, South Carolina and Tennessee.
A year ago, the thought of 2019 ACA plan premiums falling would have surprised many. Critics warned over the past year-plus that the Trump administration's moves would further destabilize the market, lead to skyrocketing premiums and cause people to flee the exchanges. So far, the higher premiums haven't happened.
Destabilization is still a threat, however. The administration also expanding short-term health plans for all Americans next year and making changes to association health plans that make it easier for people to band together and buy plans. It remains to be seen whether short-term plans and AHPs cause people to leave the exchanges and what that does to 2020 premiums.
On Thursday, CMS Administrator Seema Verma pointed to administration efforts to reduce regulations, a market stabilization rule and waivers that created reinsurance programs in seven states.
"The drop in benchmark plan premiums for plan year 2019 and the increased choices for Americans seeking insurance on the exchanges is proof positive that our actions are working," Verma said, adding that the average rates are still too high and the healthcare law needs to change.
Rather than a Trump administration success though, Larry Levitt, senior vice president at Kaiser Family Foundation, said on Twitter the average premium drop is connected to payers increasing premiums too much in 2018.
State CMS data show, for instance, Alabama's rates increased by 58% in 2017 and nearly 20% for 2018, but are now expected to drop by 2.2%. New Hampshire's premiums increased 1.9% in 2017 and 77.6% for 2018, but are now expected to fall by 15.2%.
The Trump administration just announced that average benchmark ACA premiums will decrease by 1.5% next year. The overwhelming factor behind that is that premiums increased so much this year -- 36.9%. Insurers overshot in the face of uncertainty and are returning excess profits.— Larry Levitt (@larry_levitt) October 11, 2018
Recent reports show that ACA plans now find the exchanges profitable after years of losses. A Kaiser Family Foundation issue brief found that payers are returning to pre-ACA profitability as insurers learned how to handle the marketplace. However, the same brief warned that the exchanges still face problems, namely areas of the country with little payer competition and the patient risk pool possibly getting sicker.
Used to seeing your benchmark premiums https://t.co/LLiKTISwEx ⬆by double digits every year? #DYK: Btwn 2013-2017, individual market benchmark premiums ↑ by 105%. Today, the Trump Administration announced that benchmark premiums will ⬇nationwide by 1.5% https://t.co/WBKM0Kw0mP— Administrator Seema Verma (@SeemaCMS) October 11, 2018
CMS said the average individual market premiums in states in the federal exchange more than doubled between 2014, when the exchanges began, and 2017. The average premium for the second-lowest cost silver plan increased by 37% between 2017 and 2018 and 25% between 2016 and 2017.
Another factor for prior rate increases was payers exiting the marketplace. CMS said there were 30% fewer payers in the exchanges from 2016 to 2017. This resulted in more than half of counties with only one payer in 2018.
More than 20 payers are entering or reentering the ACA marketplace and 29 payers are expanding their footprint in the exchanges in 2019. Those include Oscar Health, Centene, Cigna, Wellmark, Anthem and Medica. Cynthia Cox, director of health reforms and private insurance at Kaiser Family Foundation, said on Twitter that 15 states will have more payers in the exchanges in 2019.
This added insurance company interest means fewer counties will only have one insurer in 2019. CMS said counties with one payer option dropped 56% in 2018 to 39% in 2019. There will be four states with only one insurer compared to 10 now, and that increased competition is likely to push rates lower for consumers.