Aug. 6-10: As Navigator Deadline Approaches, Individual-Insurance Market Strengthens

A hospital advocate warned that a newly finalized rule expanding the availability of short-term plans could increase bad debt for providers.

Aug. 2—As the Trump administration prepares to accept the latest round of navigator applications this week, the individual health insurance market appears to be strengthening.

Contrary to widely held expectations that administration actions could undermine the individual-insurance market, there are growing signs that the market is improving.

The number of insurers selling individual-market insurance is increasing, the rate of premium increases is declining, and the profitability outlook is improving, according to recent data.

This week, the left-leaning Brookings Institution issued an analysis that concluded insurers will earn large profits in the ACA-compliant individual market in 2018.

Specifically, insurers’ revenues in that market will far exceed their costs in 2018 and will generate a 10.5 percent profit margin in premium revenue. That is an increase from a 1.2 percent positive margin in 2017 and “substantial losses” in 2014 through 2016, according to the report.

The expected 2018 improvement in insurers’ margins was driven by substantial premium increases heading into the year. The increases were more than enough to offset the loss of cost-sharing reduction payments amid moderate growth in underlying claims spending, according to the report.

Another positive sign is that insurers have requested an average national rate increase of 6.8 percent, according to the compilation by a national tracking site, acasignups.net. That compared to a 29.68 percent average approved rate nationwide for 2018, according to the website.

Finally, the number of insurers selling plans in the individual market appears to be increasing. In July, America’s Health Insurance Plans (AHIP) said 12 states have added insurers that will sell plans in the individual market in 2019. For instance, Bright Health is doubling in 2019 the number of states where the Minneapolis-­based health insurance company competes.

“We have a number of new entrants coming into new states, new local metropolitan areas, which I think is really exciting, it’s showing that health plans are committed to serving this market,” Jeanette Thornton, a senior vice president for AHIP, said at a recent congressional staff briefing. “They want to be able to support people who don’t get coverage through work, or don’t qualify for a federal program, and they want to support this market. And we have seen sort of that positive development there.”

Marketplace Policies

The improving outlook for the individual market comes amid ongoing policy changes that some view as weakening it.

For instance, Aug. 9 is the deadline for organizations to apply for navigator grants from the U.S. Department of Health and Human Services (HHS) for coverage year 2019. However, the Trump administration has reduced funding for navigators to $10 million—down from $62.8 million in 2016. The cuts, administration officials said, stemmed from analyses of healthcare.gov data, which showed navigators played a limited role in marketplace plan enrollments, especially compared to brokers.

HHS Secretary Alex Azar II said at a recent policy event at the Heritage Foundation that he aimed to address core shortcomings of the ACA marketplaces, specifically the limited insurance options and “heavy-handed controls on the prices that could be charged.”

One high-profile initiative aimed at addressing those issues was finalized this week, with the issuance of a final rule that triples the life of short-term health insurance plans to nearly a year. The rule also allows short-term, limited-benefit health plans to be renewed for up to three years.

“We care deeply about consumers having the information they need, so we’ve made it clear that these short-term plans aren’t for everyone, but Americans deserve all the affordable alternatives possible,” Azar said.

It remains unclear how much of an impact short-term plans, as well as the expected expansion of association health plans, will have on either ACA marketplaces or the off-exchange individual market.

“I would say that there is really a lot of uncertainty around some of the regulatory developments related to association plans … and the short-term plans,” Thornton told congressional staff. “We really don’t know how the market is going to respond to that, and what that’s really going to mean for people that remain in the market, how healthy they are or not, or what are some changes you are going to see.”

Others were more concerned that negative impacts were likely.

“For providers, these products will lead to increased bad debt, with underinsured patients unable to afford the care they need but that is not covered. Increased bad debt will further strain hospitals’ and health systems’ ability to provide a full range of services to their patients and communities, including the most vulnerable,” Rick Pollack, president and CEO of the American Hospital Association (AHA), said in a written statement. “These plans will also undermine the individual-insurance market by removing younger, healthier people from the risk pool and driving up costs for those who remain.”

Kev Coleman, head of research and data for HealthPocket, said ACA advocates have worried that the expanded availability of short-term plans will negatively affect ACA marketplace enrollment and risk pools.

“Subsidized enrollees, the heart of exchange enrollment, are less likely to be drawn away from ACA plans to short-term plans that have a narrower benefit design as well as a renewal restriction,” Coleman said. “The elimination of the fine for individuals who lack Obamacare-compliant coverage, on the other hand, poses a much greater peril for exchange enrollment than the removal of the three-month restriction on short-term plans.”

Monday, Aug. 6

Second Interoperability Forum hosted by the Office of the National Coordinator for Health Information Technology (through Aug. 8). Learn more.

Tuesday, Aug. 7

Webinar by AHIP titled “Improving Member Outreach with Machine Learning.” Learn more.

Web conference by the Advisory Board titled “Medicare Hospital Outpatient Payment Update: Proposed Rule CY 2019.” Learn more.

Wednesday, Aug. 8

Outreach and Education webinar by CMS for participants in the Hospital Inpatient Quality Reporting (IQR) Program and the Promoting Interoperability Program (previously known as the Electronic Health Record Incentive Program). Learn more.

Webinar by AHA titled “From the Cockpit to Your Operating Room: Strategies to Empower Leaders to Lead.” Learn more.

Web conference by the Advisory Board titled “Spotlight Cracks in the Care Environment.” Learn more.

Webinar by AHIP titled “Customer Engagement: Game Changer for Payers and Providers.” Learn more.

Deadline to apply to serve on the Agency for Healthcare Research and Quality’s National Advisory Council. Learn more.

Deadline for providers to decide whether they will participate in Medicare’s Bundled Payments for Care Improvement Advanced program. Learn more.

Thursday, Aug. 9

Web conference by the Advisory Board titled “Aligning Cardiac and Vascular Services.” Learn more.

Deadline to apply for navigator grants from the U.S. Department of Health and Human Services for coverage year 2019. Learn more.

Friday, Aug. 10

Deadline to apply for the 2018-19 AHA Health Care Transformation Fellowship. Learn more.