Individual market health plan affordability after cost‐sharing reduction subsidy cuts

Abstract

Objective To investigate how changes in insurer participation and composition as well as state policies affect health plan affordability for individual market enrollees. Data Sources 2014‐2019 Qualified Health Plan Landscape Files augmented with supplementary insurer‐level information. Study Design We measured plan affordability for subsidized enrollees using premium spreads, the difference between the benchmark plan and the lowest cost plan, and premium levels for unsubsidized enrollees. We estimated how premium spreads and levels varied with insurer participation, insurer composition, and state policies using log‐linear models for 15 222 county‐years. Principal Findings Increased insurer participation reduces premium levels, which is beneficial for unsubsidized enrollees. However, it also reduces premium spreads, leading to lower plan affordability for subsidized enrollees. States responding to cost‐sharing reduction subsidy payment cuts by increasing only silver plans' premiums increase premium spreads, particularly when premium increases are restricted to on‐Marketplace silver plans. The latter approach also protects unsubsidized, off‐Marketplace enrollees from experiencing premium shocks. Conclusions Insurer participation and insurer composition affect subsidized and unsubsidized enrollees' health plan affordability in different ways. Decisions by state regulators regarding health plan pricing can significantly affect health plan affordability for each enrollee segment.

Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market

“…Insurers that operate Medicaid managed care plans experienced higher compliant plan markups ($14 and $51) and lower noncompliant plan claims costs ($96), relative to other non-Blue Cross–affiliated insurers. These findings regarding insurer type, which are consistent with previous studies, 25 , 26 may reflect the different structures and strategic goals of these types of insurers.…”

Individual Market Volatility and Vulnerability, 2015 to 2019

“…Specifically, the number of insurers participating in a market is associated with fewer plan choices, including diversity of plan types (for example, HMOs, PPOs) and the availability of platinum level plans (Abraham, Royalty, and Drake 2019). The body of evidence is also growing that local markets with only one or two insurers have significantly higher premiums than those with more competitors (Dafny et al 2015;Jacobs et al 2015;Abraham et al 2017;Zhu et al 2017;Polyakova et al 2018;Drake and Abraham 2019). The relationship between competition and affordability is more complex in the individual market, given the APTC subsidy design.…”

“…Households that are APTC-eligible as a result of having incomes of between 100 and 400 percent of FPL are protected from rising premiums because their outof-pocket requirements are based on a percentage of their household income rather than on premiums themselves. In contrast, individuals with household incomes greater than 400 percent of FPL bear the full effects of rapid premium growth, creating significant affordability challenges in some markets (Drake and Abraham 2019). Affordability concerns have escalated further for the unsubsidized population segment because states and insurers have responded to federal CSR payment cuts by building those expected costs into premiums through "silver loading" practices (Anderson, Abraham, and Drake 2019).…”

Preparing the Health Insurance Marketplaces for the COVID-19 Recession

“…For nearly all individuals enrolling via the Marketplace, who do receive premium tax credits, the affordability of Marketplace coverage is determined not by how low premiums are but by the difference in premiums between the silver benchmark plan with the second-lowest cost and other plans' premiums. 5 The premium tax credit structure caps the postsubsidy premium of the benchmark plan at a sliding-scale percentage of household income. Sufficiently large differences between the benchmark premium and plans priced at values less than the benchmark plan can and often do result in marketplace plans being free after applying subsidies.…”