policy

Exchange Stabilization

ISSUE

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.  

POSITION

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

ACA Public Health Insurance Exchanges/Medicaid
Access all Public Policy resources on ACA exchanges and Medicaid.

2020 Election Health Policy Priorities
Access all Public Policy priorities leading up to the 2020 election.

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