The Robert Wood Johnson Foundation conducted case study interviews of health insurance exchange marketplace (i.e., Obamacare marketplaces) in 10 states (i.e., California, Florida, Georgia, Indiana,
Maryland, Minnesota, Ohio, Virginia, Washington, and West Virginia) to determine trends in the available plans. One general trend was that large commercial insurers were leaving the marketplace.
Marketplace participation is now dominated by two insurer types: Medicaid-managed care organizations that entered the private insurance market for the first time under the ACA and affiliates of Blue Cross Blue Shield. In many cases, national insurers (e.g., Humana, Aetna, and UnitedHealthcare) and provider-sponsored insurers (an important exception being
Kaiser Permanente) have left the marketplaces. Regional insurers are still in some rating regions but have left others.
Of particular note, while health insurance premiums rose dramatically in 2018 (on the order of 20-30% increases), in 2019 the increases generally were more modest (single digits) and in some cases declined. This trend is despite the repeal of the individual mandate. What explains this trend?
First, narrow networks became more common.
The HMO products offered by Blue Cross Blue Shield affiliates and Medicaid insurers came to dominate many markets. PPO products had a difficult time competing due to higher prices for broader networks.
Second, some states instituted more generous reinsurance programs.
Two of our study states instituted reinsurance programs. They saw significant reductions in premiums from these programs, but the need for state financing of part of the cost was thought to inhibit use in other states.
Some insurers were worried that low-cost, short-term plans would take healthier individuals away from ACA-compliant plans. However, most insurers believed that the impact would be modest. Further, some states–like California–outlawed these plans in their exchange.
So why did premiums rise so much in 2018? This appears to be a one-off adjustment form the administration’s decision to end directly reimbursing health plans for cost-sharing reductions.