- Per-person costs for medical care in the Obamacare market were essentially unchanged in 2014 and 2015, even as costs in the private insurance market grew, new data from the Department of Health and Human Services shows.
- Significant cost reductions were seen in the states with the strongest enrollment growth, suggesting that the risk pool is improving as more people sign up, according to HHS.
- “Today’s news shows the continuing strength of the Marketplace as a source of affordable health coverage for millions of Americans,” HHS Secretary Sylvia Burwell said in statement accompanying the data.
The report comes at a time when media coverage has focused on the increase of premium rates for individual coverage next year. Recently, New York finalized its premium rates and only four of the 17 companies had an approved premium percentage increase under double-digits. This double-digit trend is largely consistent with proposed rates across the country.
It's always been a struggle to stabilize and scale the individual coverage market and the ACA looked to do just that. So far, employers have not been off-loading consumers onto the market while sicker patients have been flooding insurers with more claims than expected, just to name a few examples for why insurers are proposed such rates.
According to HHS report, per-member per-month paid claims in the ACA individual market actually dipped 0.1% between 2014 and 2015, while those in the broader health insurance market rose 3% to 6%.
In the 10 states with the highest enrollment growth, per-person per-month claims costs dropped by an average of 5%. Those states also saw greater improvements in risk-adjustment program risk scores, HHS says.
A CMS official suggests a new rule could be down the pike to help strengthen the ACA markets. In an accompanying blog, CMS’ Kevin Counihan, who leads the federal marketplace effort, says the agency is exploring modification options for the ACA’s risk-adjustment program.
"In future rulemaking, we plan to propose modifying the risk adjustment program to absorb some of the cost for claims above a certain threshold (e.g. $2 million), funded by a small payment from all issuers,"Counihan wrote. :This type of risk sharing would reduce uncertainty for issuers who are not yet able to reliably predict the prevalence and nature of high-cost cases in their Marketplace business, while also protecting access to robust coverage options for people with very high-cost conditions."
The HHS data can be seen as good news for HHS and ACA proponents. With some of the major insurers planning to exit ACA exchanges next year, the fate of the Obamacare market appears shaky, and there has been no shortage of opinions on its fate. Bloomberg’s Megan McArdle notes most of the gains that have been seen are with Medicaid managed care firms that have carved out a niche in the gap between Medicaid and the exchanges, and not people on regular plans. Those plans are getting pricier.
Not everyone is convinced however. America's Health Insurance Plans called the report "overly optimistic."
“The reality is that the risk pool has not significantly improved. That is a serious concern," AHIP President and CEO Marilyn Tavenner said.