Though 2017 has been rife with policy uncertainty, the first half of the year also offered promising signs that the individual health insurance market is stabilizing.
Such is the conclusion of a new analysis from the Kaiser Family Foundation, which examined insurer-reported financial data from the first six months of the year that was compiled by Mark Farrah Associates.
The analysis builds upon a report that the foundation issued in April, which looked at financial data for on- and off-exchange individual market plans from 2011 through 2016. That report found that after a rough 2014 and 2015—the first two years of full Affordable Care Act implementation—insurers’ finances were on the upswing in 2016.
So far, insurers’ finances suggest that 2017 could be an even better year for the individual market, the new analysis suggested.
Average medical loss ratios were 77% in the second quarter of this year, compared to 89% for the same period in 2016. And looking at gross margins per member per month, insurers’ financial performance “improved dramatically” in the second quarter of 2017, rising from $38.32 to $92.84 year over year.
By the close of 2017, medical loss ratios are likely to end higher and gross margins are likely to be lower, the analysis noted. Even so, the trends in the first half of 2017 suggest that individual market insurers, on average, are on a path toward reaching pre-ACA levels of profitability this year.
Slow growth in claims for medical expenses and premium increases were the main reasons for insurers’ recent improving finances, the analysis added. Yet an examination of the average claims costs and inpatient stays among individual market enrollees in the second quarter suggests that premium hikes aren’t necessarily driving healthy customers out of the market.
Overall, insurers’ financial results “show no sign of a market collapse,” the analysis concluded. However, it also noted that policy uncertainty can still destabilize the individual market, and that some areas of the country have more fragile markets.
In the aftermath of several failed efforts to repeal the ACA, lawmakers have been trying to craft a narrow bill to shore up the law’s marketplaces. Such a measure could include two years of funding for cost-sharing reduction payments and increased state flexibility—though Republicans haven’t reached a consensus about what the latter would entail.