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June 12, 2017

Alliance for Health Reform: Briefing on Individual Health Care Market

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On Friday, May 5, 2017, the Alliance for Health Reform held a briefing “The Individual Market at a Crossroads: Health Insurance in 2017 and Beyond.” During the briefing, a panel of experts discussed the history of the individual (non-group) healthcare market, its current state, and how to promote future stability.

Experts who spoke at the briefing included Deep Banerjee of S&P Global, Karen Pollitz of the Kaiser Family Foundation, Cori Uccello of American Academy of Actuaries, and Brian Webb of the National Association of Insurance Commissioners (NAIC). Somehow, the briefing largely avoided discussion of the recently-passed House of Representatives health reform bill, allowing participants to focus on the individual market under current law.

Panel Presentations

The panel presentations touched on themes such as the background of the individual market, the changes the market has seen under the Affordable Care Act (ACA), the state of the current market, and possible strategies to ensure a stable marketplace moving forward.

Karen Pollitz

In her presentation, Ms. Pollitz compared the difference between the individual market before and after the ACA. She said prior to the implementation of the ACA, the individual market was varied, allowed for medical underwriting and coverage denials, was unsubsidized, and did not limit insurer profit. She noted that low premiums, issues with ACA premium stabilization programs, technical glitches, and low competition in certain areas affected the rollout of the individual market post-ACA.

Deep Banerjee

Mr. Banerjee noted that during the first few years after implementation of the ACA, the individual market was somewhat operational: insurers had higher than expected claims payouts, but there were signs that the market was improving and stabilizing as insurers got a better sense of the risk pool. He said in the coming years, insurers would still likely report breaking even or single digit profit margin. He believes that the new markets need time to stabilize and that uncertainty from the government continues to make it difficult for insurers to price products and may actually increase premiums to include an “uncertainty buffer.”

Brian Webb 

During his presentation, Mr. Webb highlighted the importance of addressing challenges with the individual market at the local level. He said that while the market was not working in some areas, the market was actually working well in others. He further impressed the importance of engaging with state regulators to determine where the problems were and what fixes may be available to legislators. He and Ms. Uccello both agreed with Mr. Banjeree’s assessment that an “uncertainty buffer” is increasingly likely as the uncertainty continues to loom overhead.

Panel Discussion

Uncertainty Buffer

A hot topic of the entire meeting was the uncertainty buffer. Mr. Banerjee noted that high premium increases, often as high as 25 percent, could be expected to go down to single digits or the low teens for 2018. Mr. Banerjee also mentioned that the current ACA premium subsidy was designed to grow if insurance costs in a market grew, and that therefore, premium increases were intended to have a relatively small impact on consumers.

Mr. Webb mentioned the need for regulatory flexibility to account for issues unique to certain local markets.

High Risk Pools

A hot topic in healthcare reform, high risk pools, were also given much attention. Ms. Uccello said that high risk pools could be funded and designed many ways. She noted that current proposals to reform the financing of health care for high-cost individuals were unclear with respect to implementation. Mr. Banerjee noted that another strategy to offset risk of high cost beneficiaries is the idea of reinsurance, which he believes works better. Ms. Uccello pointed out that reinsurers were also risk-averse insurance companies, which are not required to sell policies to everyone, and they would likely stop insuring high-cost individuals once it became clear who they were.

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