Payers with ACA plans expected to have relatively strong year

Dive Brief:

• Payers that stayed in the Affordable Care Act (ACA) exchanges are expected to have a better than feared year, according a slew of reports from Goldman Sachs, S&P Global Ratings and A.M. Best.

• Open enrollment in ongoing in a few states, so the final number of enrollees won't be known until February. But enrollment figures have surpassed expectations already.  

• In other good news for the exchanges, the state of Connecticut reported that its exchanges will have 2.3% more enrollees in 2018. Also, Centene, a payer that's expanding its ACA plan footprint this year, said it has more than 1.4 million people signed up in ACA plans.

Dive Insight:

If 2017 was the year of fearful predictions for the exchanges, 2018 has so far been a year of exceeding expectations. Large payers, such as UnitedHealth Group, Aetna, Humana and Anthem, pulled partially out or completely out of the exchanges for 2018. Many cited the unpredictability of the market.

However, with the ACA still in place and all counties with at least one ACA plan option, experts now don’t expect 2018 will be as traumatic for the exchanges as previously feared. The “repeal and replace” effort failed on Capitol Hill and there may not be the political will — especially in an election year — to try again.

In a recent review of health insurers, S&P said most payers in the exchanges have seen gradual underwriting improvement. As payers continue to learn, more insurance companies will reach low single-digit margins this year and in 2019, projected S&P.

“Like wine, some insurance markets get better with age. The individual ACA market isn't mature yet, but the experiences from the past four years have helped insurers design and price products more appropriately for the risk in the individual market,” said S&P.

In its own review of the health insurance industry, A.M. Best also said individual markets are stabilizing. Payers have increased rates and narrowed provider networks, which resulted in market stabilization. “A.M. Best expects the individual ACA exchange business to continue to improve in 2018, as insurers take appropriate pricing actions,” according to the report.

Meanwhile, enrollment in ACA plans is expected to fall short of the 9.2-million member number in 2017, but better than once thought. Advocates worried that the Trump administration's actions to cut the open enrollment period in half and slash advertising and outreach budgets for the ACA plans would result in much smaller enrollment numbers. 

However, a final push the week of the open enrollment deadline in December increased enrollment past more than 8.8 million members for the 39 states that use the federal government exchange rather than their own state exchanges. That 8.8 million figure continues to grow. Connecticut, where open enrollment ended on Dec. 22, said it has 114,134 members in the exchanges in 2018, which is a 2.3% increase over 2017. 

There are also states with open enrollment deadlines this month, including California, Massachusetts, New York and Washington. So, the final number won't be known until February, but enrollment figures have surpassed expectations already.

Though experts are more optimistic about the exchanges for 2018, some issues remain and there’s still worry that policymakers and national leaders will work against the ACA and exchanges. The Trump administration ended the cost-sharing reduction (CSR) payments to insurers in the exchanges. The payments help contain lower-income members’ out-of-pocket costs. Depending on what it’s able to accomplish this year, Congress may or may not agree to pay the CSR subsidies.  

Regardless, A.M. Best doesn't think losing CSR payments will affect payers much this year. Most payers already received a large portion of the payment for the year. Plus, many state regulators allowed plans "to adjust premium rates prior to the open enrollment to avoid a potential negative financial impact,” according to report.