Carrier Losses Not Expected to Impact Individual Market Viability, Report Finds
Despite losing $2.7 billion in 2014, the individual insurance market "will likely continue to be a large, viable" market due to mandated coverage and federal cost sharing and premium subsidies, according to a reportfrom the McKinsey Center for U.S. Health System Reform. The report also found great variability in profitability across states and carriers. Nationally, financial performance varied widely: in six states, more than 75% of carriers were profitable; in California and Washington, 95% of carriers were profitable; however, in 18 states, fewer than 5% of carriers were profitable and six states had no profitable carriers. Additionally, authors found that the 30% of carriers that were profitable in 2014 covered 40% of the individual market. The report's authors conclude that such state-to-state variation suggests carrier-specific factors, such as network breadth and "managed plan design," likely influenced financial performance. This is supported by HMOs' lower losses compared to PPOs, and by HMOs' lower premium increases (half of PPOs' increases) in 2015 and 2016.
Humana Exiting Four Individual Markets
Humana announced its exit from individual markets in at least four states at the end of 2016: Alabama, Kansas, Virginia, and Wisconsin. The25,500 people impacted by the change account for 3% of Humana's total individual market enrollment; 15,000 of those individuals are in Alabama, which is the only of the four states in which Humana offers Marketplace plans. Humana's exit from Alabama, along with UnitedHealthcare's recently announced exit, will leave the State with a single Marketplace carrier (Blue Cross Blue Shield of Alabama).
Some Marketplace Cost Sharing Rates Increased Moderately, Report Finds
Marketplace plans in 2016 saw moderate—though statistically significant—increases in out-of-pocket limits (7.1%), annual deductibles (10.3%), and copayments for non-preferred brand drugs (13.6%), according to areport from The Commonwealth Fund. Generic drug copayments were the only form of cost sharing that decreased (3.2%). The report attributes a portion of the overall increases in cost sharing to the greater number of bronze and silver plans offered, since they have less generous coverage. The report's authors also note that their figures may reflect aggregate changes, rather than year-to-year changes within a specific plan, and that the increases only apply to the 40% of Marketplace enrollees who do not receive cost sharing reductions. The authors conclude that future trends in cost sharing will be linked to trends in medical expenses, though future cost sharing increases in Marketplace plans are likely to be smaller than increases in employer-sponsored plans.
Report Examines Marketplace Tools to Support Consumer Decision-Making
Marketplace websites made significant strides during the third open enrollment period in providing consumers with decision support tools that allow them to select plans that align with their financial and medical needs, according to a report by the National Partnership for Women and Families. Manatt Health supported this study, an update from a 2015 analysis, by identifying new tools available on HealthCare.gov's window shopping feature and on State-based Marketplaces' websites, including customized cost estimators, integrated provider directories and prescription drug directories. The authors note that the tools represent a step forward for consumers but could still be strengthened. For example, future cost estimators could take into account specific medications or treatments and prescription drug directories could identify levels of cost sharing associated with specific medications.
California: Marketplace Premiums May Spike Next Year
Covered California's $308 million proposed FY 2016-2017 budgetestimates that qualified health plan (QHP) premiums may increase an average of 8%—double the last two years' increases. The increase predominantly reflects the estimated impact of the 2017 expiration of the federal reinsurance and risk corridors programs, which were designed to financially buffer plans against high-risk enrollees. Final premium rates will be released in July after State officials conduct private negotiations with the State-based Marketplace's QHP issuers.