August 10, 2017

ACA uncertainty helped drive rate hike requests, KFF finds

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Health insurers throughout the country have requested double-digit premium rate hikes for 2018 exchange plans, and many insurers have cited uncertainty surrounding the Affordable Care Act (ACA) as a reason for the increases, according to a Kaiser Family Foundation (KFF) analysis released Thursday.

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According to CNBC, insurers had to submit their final premium rate filings for 2018 exchange plans by Aug. 9. The companies do not have to sign contracts to sell exchange plans for the 2018 coverage year until Sept. 27.

Analysis details

For the analysis, KFF researchers analyzed initial premium rate filings across 21 major cities. The researchers noted that the premium rate filings were current as of Aug. 7, but are preliminary and are likely to change before the ACA's upcoming open enrollment period begins.

Findings

According to the analysis, health insurers have requested premium rate changes ranging from a 5 percent decrease in Providence, Rhode Island, to a 49 percent increase in Wilmington, Delaware. The researchers found that a large number of insurers attributed requested premium rate increases to uncertainty surrounding the ACA's:

  • Cost-sharing reduction (CSR) payments, which resulted in insurers increasing requested rates by between 2 and 23 percent;
  • Individual mandate, which resulted in insurers increasing requested rates by between 1.2 and 20 percent; and
  • Health insurance tax, which resulted in insurers increasing requested rates by about between 2 and 3 percentage points.

Insurers indicated that they could request higher premium rate increases if the Trump administration decides to stop making the CSR payments.

The premium increases would have the most significant effect on U.S. residents with incomes too high to qualify for federal subsidies to help offset the premium costs, the researchers said. According to KFF, 84 percent of exchange plan enrollees qualify for the subsidies, which would largely offset the premium increases. The researchers said some enrollees might have to switch plans in order for their subsidies to offset the increases, but projected that individuals who enroll in the second-lowest-cost silver-level plans for the 2018 coverage year could see their premiums decrease by about 2.9 percent when compared with 2017, after subsidies are taken into account.

The researchers also found the number of insurers that have signaled they intend to sell 2018 exchange plans has declined when compared with 2017. Across 20 states and the District of Columbia, an average of 4.6 insurers per state have indicated that they will participate in the exchanges for the 2018 coverage year, compared with an average of 5.1 insurers per state that participated in the exchanges for the 2017 coverage year.

Comments

Larry Levitt, a senior vice president at the Kaiser Family Foundation, said, "In most of the country, the market would be stable if not for significant uncertainty about what the … administration will do." He added, "Virtually every insurer cites policy uncertainty as a factor in premium increases, and where insurers quantify the uncertainty it's often upwards of half the premium increase."

Cynthia Cox, an author of the analysis and associate director of KFF's Program for the Study of Health Reform and Private Insurance, said, "We still would have seen premium increases in many of these states even without the political uncertainty," adding, "But if the … administration had been more clear about what the rules were going to be for next year, we would likely have seen much smaller premium increases."

Cox continued, "We're likely to see some insurers going back and asking for even higher premium increases from what they initially requested, and if they don't get more clarity soon from Congress or from the administration, we may see more insurers exiting the market later this month or next month" (Coombs, CNBC, 8/10; Roubein, The Hill, 8/10; Luhby, CNN Money, 8/10; Livingston, Modern Healthcare, 8/10; Kamal et al., Kaiser Family Foundation analysis, 8/10).

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