Now that health plans have a better understanding of what it is required to do business under the Affordable Care Act, they are likely to increase premiums and more will pull out of the exchanges, some analysts say. They also question the viability of the individual market.
Uncertainty is now the driving factor in the healthcare insurance industry, but in the short run, plans are searching for ways to be successful under the Patient Protection and Affordable Care Act, which remains in place, for now.
It's an interesting time for the industry, says Michael A. Morrisey, PhD, professor and head of the Department of Health Policy & Management in the School of Public Health at Texas A&M University. The demise of the repeal and replace effort in the Congress leaves health insurers in a state of considerable uncertainty, he says.
"Last year insurers finally got a handle on the true nature of the claims experience they had in the exchanges. As a result, this year more insurers moved to offering only narrower panel HMOs, many left the exchange markets altogether, and others raised premiums, sometimes dramatically," Morrisey says.
"The uncertainty is whether the narrower networks and premium increases are enough to cover the claims experience. If not, I think more insurers would exit the exchanges and premiums will rise."
The new administration raises the degree of uncertainty exponentially, he says, citing several areas of concern.
If the funding for the low-income cost sharing subsidies is withdrawn, many people currently covered by the exchanges are likely to allow their coverage to lapse, Morrisey explains, and these are likely to be the healthier enrolled consumers.
"Similarly, if the administration chooses not to enforce the penalties for non-enrollment, many of the disproportionately healthy among the current enrollees will likely drop coverage," he says. "Tinkering with the benchmark definition of the essential health benefits is a more complex problem. Insurers would struggle to cost out new, less generous benefit packages and price them."
On the other hand, he says, if states expand Medicaid as some are currently considering, this is likely to draw off some of the less healthy exchange enrollees and reduce cost pressure on the insurers.
"All that said, unless the administration moves quickly to reassure the industry, one way or the other I think we can expect more insurer withdrawals from the market and much higher premiums," Morrisey says.
Gregory A. Freeman is a contributing writer for HealthLeaders.