Dive Brief:
-
Premium subsidies will likely keep the individual market stable despite 2 million fewer people with individual insurance than a year ago, according to new Kaiser Family Foundation analysis. KFF analyzed data from the National Association of National Commissioners compiled by Mark Associates.
-
KFF found total individual insurance enrollment decreased 12% year-over-year to 14.4 million in the first quarter of 2018. Off-exchange enrollment dropped by 2.3 million, a 38% decrease in that period. Another 209,000 people in the exchanges, but without subsidies, dumped coverage. Overall exchange plan membership increased by 3% or 313,000 people.
-
As people without subsidies drop coverage, the individual market is becoming dominated by people with lower incomes and Americans with pre-existing conditions. That’s a more expensive risk pool, which will mean higher premiums.
Dive Insight:
Individual market enrollment has dipped over the past two years as unsubsidized plans have seen massive premium increases. ACA exchange enrollment peaked at 11.1 million people in 2016, but since then those without subsidies have seemingly decided higher-priced coverage isn't worth it.
KFF said premiums and claims both went up in the first quarter in the individual market. Average first-quarter claims per person increased to $336 this year, which is nearly double the cost from 2011 — before the exchanges’ regulations kicked in. These results show that the individual market’s risk pool is getting sicker.
Subsidized enrollees now dominate the market. Nearly two-thirds of enrollees in the overall individual market were subsidized, a steady progression since 2015 when less than half of the market was.
A more stable market
The individual market has actually found its footing over the past two years. KFF said individual plans showed signs of stabilizing in 2017 as payers got to profitability.
Insurance companies increased premiums by double digits for 2018 as uncertainty surrounding the individual mandate and cost-sharing reduction (CSR) payments caused angst for payers. Those fears came true when the Trump administration stopped CSR payments and Congress axed the individual mandate penalty starting in 2019.
Last summer saw big-name payers drop or pull back on individual insurance. However, we’ve not seen that mass exodus this year. Instead, many payers are proposing single-digit premium increases for 2019. Insurance companies like Centene expect to expand their footprint. Even Anthem, which pulled back on the exchanges last year, said it may grow its insurance plans slightly in 2019.
This reversal from last summer shows that despite the upheaval of last year, payers are more comfortable in the individual market. That’s good news for people with subsidized coverage. It does little to improve the situation of those in unsubsidized plans, though.
Enrollment numbers will likely get worse next year as the individual mandate penalty ends and the Trump administration expects to expand lower-cost short-term health plans. Both of these actions will probably drive more people out of the exchanges.
The risk pool will get sicker, premiums will go up and more people will drop coverage.
“While the majority of people on the exchanges receive subsidies and will be protected from premium increases, middle-class people who do not qualify for subsidies will feel the brunt of future premium increases. This is especially true of people with pre-existing conditions who likely would not qualify for short-term plans that base eligibility and premiums on people’s health,” KFF warned.