Ohio officials faced a situation in the summer of 2017 they viewed as dire: No health insurers were expected to offer any marketplace plans in as many as 20 counties.
In Ohio and around the nation, officials scrambled that year to recruit insurers to make sure that every county had at least one plan in the marketplaces created by the 2010 health care law. Insurers, deeply skeptical of the future of the law and the Trump administration’s oversight of it, raised monthly premiums before open enrollment for 2018, further raising worries about the marketplaces’ stability.
Two years later, the Ohio Department of Insurance reports that the worst situation in the state is that one county will have only one insurer. The average premium in the state fell 2 percent this year, according to data released Tuesday by the Centers for Medicare and Medicaid Services.
Despite actions by the Trump administration to undercut President Barack Obama’s signature health care law, the marketplaces set up under the 2010 law appear mostly stable. In many states, rates are expected to increase slightly or remain flat for 2020. A handful of states will see rates fall significantly after implementing policies designed to drive down costs.
As the marketplaces’ seventh year approaches, insurers now better understand the population they cover and how to price their products, say experts who watched the evolution of the insurance exchanges.
Still, the uninsured rate crept up during the Trump administration, highlighting the unaffordability of the plans for people who don’t qualify for financial assistance and the potential impact of the administration’s policies.
An ongoing lawsuit to overturn the law, brought by conservative state attorneys general and backed by the Trump administration, also raises risks for the future. The U.S. Court of Appeals for the 5th Circuit has yet to rule after a three-judge panel heard an appeal in July. If the appeals court upholds a lower court’s ruling and strikes down the law in the coming weeks, it could depress enrollment even though any ruling is not expected to immediately take effect.
So far, though, the unexpected resilience of the marketplaces shows that insurers have learned how to profit in the insurance exchanges that launched in 2014 with a federal website that did not work and underwent a barrage of changes during both the Obama and Trump administrations.
The durability could also solidify a shift in political rhetoric on the exchanges, which for several years spurred complaints over rising premiums that were finalized just before Election Day. During the first few years of the marketplaces’ implementation, Republicans called for an overhaul of the law while recently, Democrats in 2018 campaigned on protecting it.
“We’re in a different place certainly than we were on the eve of the last presidential election but my suspicion is the ACA will still very much be at the center of this next election cycle,” said Elizabeth Carpenter, head of advisory services at the consulting firm Avalere Health, using the law’s acronym.
Open enrollment begins in most states on Nov. 1. The average premium fell 4 percent for the 2020 plan year, with premiums decreasing in 27 of the 38 states that use the federal exchange platform, HealthCare.gov, according to the new CMS data.
The trend follows price drops before last year’s sign-up season, too. The average premium for a benchmark silver plan fell 1.5 percent for 2019 plans. That marked the first time the average premium fell since the health law’s implementation, according to CMS. That was a reversal from the first year of the Trump administration, when the average premium jumped more than 30 percent compared to the year before.
Kelly Schultz, the executive director of commercial policy at America’s Health Insurance Plans, a trade group representing insurance plans in Washington, said the stabilized premiums reflect both a correction after substantial increases in 2018 and steps the administration took to improve the markets, like approving reinsurance programs in some states.
One reason why insurers raised rates in 2018 was that the Trump administration indicated it would stop giving the plans payments called for in the law, known as cost-sharing reductions.
“CSR loading contributed to some significant premium increases, which is why we’re now seeing things largely stabilize,” she told CQ Roll Call. “But there are some other positive factors as well.”
The soaring premiums for 2018 came about amid uncertainty largely driven by Republicans’ actions to undercut the health care law, but insurers’ growing optimism about the marketplaces led to the lower increases for 2019 and 2020, said Rachel Fehr, a research assistant at the nonpartisan Kaiser Family Foundation.
“There certainly still is uncertainty but I think as far as 2020, insurers are feeling pretty confident that they’ve got a handle on how to price these plans now,” said Fehr.
Some states, like Colorado and Delaware, are set to see significant premium drops after creating stabilization programs like reinsurance, a tool that a dozen states have adopted to provide funding to insurers to help cover the most expensive patients. The average rate is set to fall 20.2 percent in Colorado and Delaware’s insurance commissioner said rates there would fall 19 percent.
Years of uncertainty
Sabrina Corlette, a research professor at the Georgetown University Center on Health Insurance Reforms, said insurance companies anticipated a lot of different policy changes heading into the 2018 plan year that later happened, including the administration’s end to cost-sharing reductions. Insurers raised rates over concerns that the Trump administration would stop giving the plans payments called for in the law, known as cost-sharing reductions. Insurers also questioned whether the administration would enforce a requirement for individuals to get coverage and would allow for the sale of plans that don’t meet all of the health law’s requirements.
After insurers priced their policies for 2018, Republicans ended the penalty for not having insurance as part of the 2017 tax overhaul and the administration expanded the availability of association health plans and short-term plans that don’t have to comply with the law’s requirements.
“The rates were anticipatory,” Corlette said of insurers’ 2017 decisions. “Insurers are doing the best they can to look as far down the road as they can and they saw the writing on the wall early in 2018.”
“They were sort of overly conservative with their estimates of how much risk they’d have to take on going into 2018 and so now we’re seeing a recalibration as we go into 2020,” she added.
It’s still hard to gauge the full impact of some Trump administration policies, such as how many people have enrolled in short-term plans, or whether the administration will do more to undermine the law.
The Trump administration has warned in filings that in the future, it could ban a practice that insurers use, called “silver loading,” to help blunt the impact of rate increases. That practice adds costs onto the silver plans that are tied to consumers’ subsidies, so that most consumers are shielded from higher premiums but the government pays more.
CMS has said it would not block that tactic before 2021, giving insurers certainty at least for the year ahead.
One question for the marketplaces is the outcome of the administration-backed lawsuit seeking to overturn the health care law, brought by Texas Attorney General Ken Paxton and other right-leaning attorneys general. The 5th Circuit could rule at any time.
But insurers don’t seem to be planning for such a threat to the heart of the law.
The case “presents uncertainty that’s hard for insurers to plan for or build into their rates,” Fehr said. “It seems like insurers aren’t really trying to prepare for that right now.”
If changes pop up, insurers now seem to believe they have the lead time and experience to make adjustments, said Corlette.
“Insurers feel like they’ve weathered the worst of the storm between 2017 and 2018,” she said.