Rich Daly | November 3, 2015
Premiums and deductibles for plans sold in the government-run insurance marketplaces are surging, according to recent analyses. With 2016 open enrollment underway, that means assistors should encourage consumers to shop around.
Average premiums are increasing by double digits across the four categories of health plans sold in the marketplaces created by the Affordable Care Act, according to an analysis this week by HealthPocket, which offers a plan comparison service. Average premium increases range from 10 percent in the lowest-cost bronze-level plans to 16 percent in the costliest platinum-plan category.
Deductibles likewise are surging for 2016. In the bronze level, which generally has the highest deductibles already, average deductibles will increase by 11 percent, to $5,731, for individuals and by 10 percent, to $11,601, for families.
Similarly, the average lowest-cost silver plan in the 37 states with a federal marketplace increased by 13 percent from 2015 to 2016, according to an analysis by consultancy Avalere Health. That was significantly larger than the 3.2 percent increase Avalere found from 2014 to 2015.
That increase was more important than overall increases, according to Avalere, because marketplace enrollment often is concentrated in the lower-priced plans of each metal tier. For instance, 31 percent of 2015 enrollees selected the lowest-cost plan in their tier and 17 percent selected the second-lowest cost plan, according to a recent report by the U.S. Department of Health and Human Services (HHS).
Those analyses painted a more negative outlook than a previous HHS report, which highlighted a 7.5 percent average increase in silver-level benchmark plans, which are usually the second-cheapest in each market.
Shopping Significance
Despite their emphasis on relatively smaller premium increases for 2016, HHS officials also underscored the need for the expected 10 million enrollees to shop for coverage to avoid substantial increases.
A recent HHS report concluded that 86 percent of the 9.9 million currently enrolled in 2015 coverage could find a plan with lower premiums in the same metal level—before accounting for subsidies—by shopping among the new 2016 offerings. Nearly one-third of consumers who reenrolled in a marketplace plan in 2015 switched to a new plan.
“It’s particularly important that they look and think about the plan that is the best choice for them because in many instances the largest increases occurred in the most popular plans in the state,” Gail Wilensky, senior fellow at Project HOPE, former administrator of the Health Care Financing Administration (now the Centers for Medicare & Medicaid Services), and a regular contributor to hfm, said in an interview.
The biggest challenge of the current open enrollment period, according to Wilensky, will be persuading enrollees who like their current benefit-cost combination to reexamine their coverage in light of premium and deductible hikes.
Another challenge during open enrollment is enticing higher-income enrollees to join the marketplaces. Although HHS has touted that 80 percent of shoppers last year qualified for subsidies to lower their premiums, that statistic also demonstrates the relatively scarce number of middle-income uninsured people who are obtaining coverage in the marketplaces.
Illustrating that challenge in part was a recent report from the Robert Wood Johnson Foundation (RWJF), which found that 62 percent of people who were eligible for tax credits and had incomes below 200 percent of the federal poverty level (FPL) signed up for 2015 coverage. Participation declined significantly as income levels rose: 29 percent of people earning 200 to 300 percent of FPL enrolled, as did 13 percent of those earning 300 to 400 percent of FPL.
“These are likely to be very costly plans if you are above 300 percent of the poverty line and pretty significant if you are above 250 percent of the FPL,” Wilensky said.
HHS officials said they were hoping to boost enrollments by emphasizing the higher tax penalty that the ACA imposes this year on people who lack qualifying insurance coverage. But the lowered enrollment projections—10 million, according to HHS, or half the total projected in a report five months ago by the Congressional Budget Office—belied the effectiveness of the penalty push, Wilensky said. Alternatively, more subsidies or skimpier—and cheaper—plans for middle-income residents might be needed to increase their enrollment numbers.
Instead of emphasizing fines, navigators and enrollment assistors may have better luck enticing eligible people to sign up for coverage by emphasizing the lowest-cost options available, according to the RWJF report. Specifically, low enrollment in five select states (Colorado, Iowa, Minnesota, Washington, and West Virginia) consistently was associated with “affordability issues,” among other challenges.
Plan Health
The enrollment season for the third year of the ACA marketplaces has been marked by the failures of about half of the 23 not-for-profit CO-OP health plans, which were launched using $3 billion in ACA loans. Those insurers were felled, in part, by their reliance on unsustainably low premiums to attract enrollees. Although some commercial insurers also have suffered steep losses after using the same tactic, Wilensky did not view the CO-OP failures as indicative of the overall health of marketplace plans.
“The companies that are in the exchanges are more sophisticated, have been in the business longer, and understand the kinds of risks that they face,” Wilensky said.
For instance, commercial insurers generally have the cash reserves to weather any mistakenly “low-balled premiums,” Wilensky said.
Although the average number of marketplace plans per county fell 15 percent to 48, the total number of insurers increased by five to 238, according to HHS.
Source: HFMA
https://www.hfma.org/Content.aspx?id=43323