- A new Government Accountability Office report seeks to explain how insurers have fared selling plans in the Affordable Care Act's online exchanges by analyzing what drives their decisions to sell plans, set premiums and plan designs. The report also considers how claims cost influence those outcomes.
- In addition to consulting academic papers and other studies, the authors interviewed nine insurers selling plans in at least one of the following five states: California, Florida, Massachusetts, Minnesota and Mississippi.
- Costs were higher than expected in the initial years of the marketplace and continued to vary widely, while some had large swings from year to year. Insurers noted that state requirements sometimes resulted in reduced participation in the exchanges and higher premiums, while some saw the opposite in other states.
A key part of the ACA was an online marketplace that allowed millions of Americans to shop for health insurance, which was initially required for nearly every individual under the individual mandate. The marketplace was intended to largely help those without employer-sponsored coverage.
The ACA set federal standards for insurance, including a provision that barred a patient from being denied for having a pre-existing condition.
While much is known about how the expanded access has affected Americans, the GAO report seeks to explain how insurers have fared in the new marketplace, which opened for business in 2014.
Even though many Americans have benefited greatly because they qualify for subsidized coverage, costs have risen to a point where coverage can be unaffordable for those who don't qualify for financial help.
For the insurers, claims costs were higher in the early years because enrollees were sicker than expected. But costs have continued to vary widely and some state and federal policies have played a role in costs, according to the report.
For example, Blue Cross Blue Shield of Minnesota said that it contracted its business in its home state because of a law that banned issuers from canceling an enrollee's coverage, except in limited circumstances.
To stem its losses, the BCBS plan of Minnesota quit selling a PPO product throughout the entire state and continued to sell an HMO product in various counties.
Some carriers have fared better than others.
"Profitability varied across issuers," the report said. "For example, one study reported that 30 percent of issuers nationally were profitable in 2014, and issuers with narrowed networks and managed plan design had lower losses than those with broad networks."