There’s been much ado over rising premiums on the Affordable Care Act marketplaces, and for good reason: Premiums are up 22 percent nationally, based on available data from states and Healthcare.gov. For some perspective, last year premiums for the same benchmark level silver plans increased just 7.5 percent.
Republican strategists promptly pointed to the hikes as a winning ingredient for tight congressional races, and Donald Trump has reiterated his conclusion on numerous occasions, from the debate stage to the rally podium, that the ACA is a “disaster.”
Further seizing on reports of climbing premiums, on Tuesday Trump promised to call for a special session in Congress to "repeal and replace" the ACA immediately upon entering office, which confused those in Washington who noted that the next Congress will already be in session by Inauguration Day, The Washington Post reports.
Behind the political talking points, though, lies a mix of market forces and policy realities that have led to significantly higher premiums in 2017 for ACA plans--which experts have been expecting for months. Here's a look at some of those factors:
- Marketplace plans have been underpriced in previous open enrollment periods due to lack of data for insurers to use in their actuarial models. Insurers didn’t know what the risk pool would look like in this new market, and found out the hard way that young and healthy enrollees failed to offset the costs of the more older, sicker individuals who did enroll.
- Despite three years of data on the cost to insure ACA consumers, insurers still face uncertainty about how the risk pool will shape up each year, Paul Ginsberg, Ph.D, Brookings Institution’s health policy center director, has told FIerceHealthPayer.
- Two of three premium stabilization programs--risk corridors and reinsurance--are ending this year. Only the risk adjustment program will remain indefinitely.
- Some states have not opted to expand Medicaid coverage--and states that expand Medicaid have 7 percent lower individual marketplace premiums on average.
- There is less competition on the exchanges--the least ever. Nationally, 31 percent of counties will feature one insurer offering plans, which opens the door for insurers to act like monopolies in those counties. Last year, just 7 percent of counties hosted one insurer.
- Insurers have tried to underprice their plans in previous open enrollment periods in order to gain market share. Premium hikes are one way for insurers to “correct” previous underpricing--and ultimately help them recover losses.
- Consumers who lost plans because of insurer exits mean current health plans will have to take on those enrollees, who drove millions in losses for other plans, stoking uncertainty about the risk pool.
- Providers have steered Medicare and Medicaid-eligible enrollees into marketplace plans to boost reimbursement rates, boosting the number of high-risk enrollees on the marketplace.