As rate filing deadlines loom, market uncertainty factors heavily into insurers' ACA exchange decisions

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While 94% of respondents currently offering plans on the ACA exchanges intend to remain in that market next year, 42% of respondents said they would likely withdraw from the market if cost-sharing reduction funding is halted. (Getty/Eugenia Chaikina)

Two new analyses make it crystal clear that uncertainty about the fate of the Affordable Care Act is weighing heavily on health insurers’ decisions about how to price their individual marketplace plans next year—and whether to even offer plans at all.

One analysis, from the consulting firm Oliver Wyman, says that based on a nationwide survey of health insurers in May, what happens to funding for cost-sharing reduction payments (CSRs) will have a “significant impact” on 2018 rates and participation in the ACA exchanges.

These subsidies, which the government pays to insurers to help consumers with out-of-pocket healthcare costs, are at the center of a legal case that challenges their constitutionality. The case is on hold, and despite pleas from the healthcare industry, Congress and the Trump administration haven’t yet said whether they plan to continue CSR funding after the case is resolved.

While 94% of respondents currently offering plans on the ACA exchanges intend to remain in that market next year, 42% of respondents said they would likely withdraw from the market if CSR funding is halted. The other 58% said they would refile their proposed rates, “with the assumption being payers would adjust rates higher to cover the loss of the CSR payments,” the analysis says.

Insurers’ 2018 rate requests must be submitted to state regulators by June 21. Typically, insurers aren’t allowed to revise their proposed rates after that, but some state regulators have said they will allow for additional flexibility this year, the analysis notes. One such state is California, where Insurance Commissioner Dave Jones told insurers they could submit two sets of rate filings—one reflecting continued CSR funding and enforcement of the individual mandate, and another assuming the opposite.

As far as rate increases go, the analysis found that the number of insurers planning significant rate hikes is rising. Forty-three percent of respondents said they were planning on increases of 20% or more, whereas only 25% of respondents to a survey the firm conducted in April said they were planning rate hikes that high.

The straight average across all respondents was a 20% planned rate hike, the analysis says, which is actually lower than the 22% weighted average increase for 2017 reported by the government. Yet the analysis notes that rates increases were initially expected to be lower this year given that the individual markets were on track to stabilize.

“Given the survey responses, it appears that the overall uncertainty of the market is impacting payers’ 2018 planning,” the analysis concludes.

Another analysis, also from Oliver Wyman, produced similar findings based on the firm’s predictive modeling. It estimates that more than two-thirds of projected rate increases in 2018 will be related to two specific market influences: whether funding for CSRs will continue, and how the relaxation of the individual mandate will affect enrollment and risk pools.

Other—though smaller—factors projected to influence rate increases include the return of the federal health insurance tax and rising medical costs.