Since the creation of the health insurance exchanges in 2014, the marketplaces have become increasingly unstable. Premiums for silver plans linked to tax credits have increased by 85% from 2014 to 2019 and insurer participation has decreased by 32% from 2015 to 2019. Although in 2019, exchanges stabilized a bit as premiums went down by 2% and insurer competition increased moderately.
The exchange population also skews older, with the largest enrollment group by age being early retirees or people aged 55 – 64. Those purchasing coverage without financial assistance face increasingly unaffordable premiums.
Congress and the Administration should take action to ensure a viable individual market for those without access to employer-sponsored coverage. Potential actions include:
- Encourage younger and healthier people to enroll in coverage;
- Allow states and insurers to implement value-based insurance designs for individual coverage;
- Give insurers more flexibility on benefit designs;
- Establish subsidized reinsurance programs or high-risk pools for high-cost exchange enrollees without taxing employer-sponsored insurance; and
- Refocus cost control efforts on supply-side drivers of medical inflation and unnecessary costs.
WHY IT MATTERS
- Employers utilizing the exchanges for certain employee populations (part-time, seasonal, temporary, etc.) and early-retirees would benefit from a more stable individual market.
- Increasing the number of people covered by private insurance reduces pressure on providers and other suppliers to shift uncompensated or lower compensated care to employer plans.
- Offering a government-run plan that sets payment rates at Medicare FFS payments could increase cost-shifting to the private sector due to lower reimbursement amounts. Additionally, it would do little to advance value-based payments and alternate delivery models. Ultimately, the plan would have little incentive to contain costs, manage care, reduce waste, and improve quality.
- Establishing reinsurance programs funded by taxing employers, employees and their families will raise costs without providing additional benefits to employees.
Also of Interest