Kaiser: The Individual ACA Market is Stable/Profitable

quote:

---

The individual market is where just 7% of the U.S. population gets their insurance (and thus also represents a small share of most health insurers’ business), but the stability of the market and willingness of insurers to continue to participate is essential to the ACA’s success. Going into 2017, there were a number of high-profile exits and premium increases, raising concerns over the stability of the individual market. Although some local markets are likely fragile, the Congressional Budget Office expects the ACA individual market to remain stable across most part of the country.

---

quote:

---

The figures include coverage purchased through the ACA’s marketplaces and ACA-compliant plans purchased directly from insurers outside the marketplaces (which are part of the same risk pool), as well as individual plans originally purchased before the ACA went into effect.

---

quote:

---

In 2014, when the exchanges opened and the bulk of the ACA’s market reforms took effect, individual market insurer financial performance worsened, with individual market MLRs averaging 98% compared to 84% a year prior. The individual market underwent a number of changes in 2014, and insurers had very little information to work with in setting their premiums. On average, insurers set premiums too low to cover their costs in the individual market. This mispricing is likely due to a combination of fewer young or healthy enrollees than initially anticipated, which was augmented by the late regulatory decision to permit some non-compliant plans to be retained, as well as some competitors apparently underpricing in an attempt to be competitive (low-cost silver premiums for 2014 came in substantially lower than CBO projections).

---

quote:

---

What does this mean for the exchanges and broader individual market this year and next? On average, we do know that insurers participating in ACA marketplaces raised premiums substantially from 2016 to 2017, with benchmark premiums rising an average of 22%. Marketplace enrollment has held mostly steady, with open enrollment signups totaling 12.2 million for 2017, about half a million below 2016 levels. Assuming claims expenses do not rise unexpectedly, insures may significantly improve their financial performance in this market in 2017.

---