3 possibilities for the future of the ACA exchanges

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With health insurers struggling to turn a profit on the Affordable Care Act exchanges and premiums likely to rise, many have wondered what the future will hold for this prominent feature of the Obama administration’s healthcare reform law.

This week, Aetna became the latest major insurer to indicate it will re-evaluate its participation in the ACA marketplaces amid climbing financial losses that mirror those experienced by UnitedHealth, Humana and much smaller consumer operated and oriented plans.

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What’s more, the cost of the ACA’s “benchmark” silver plan will increase by a weighted average of about 9 percent in 2017, compared to a 2 percent average increase in 2016. And in some areas of the country, insurers have requested steep rate increases--as much as 60 percent--for their exchange plans.

It is still unclear how these developments will play out, but a Bloomberg opinion piece outlines some possible scenarios:

  • Premium rates could level out or even fall as the marketplaces mature. A few different factors could produce this result: Insurers could correct their initial mispricing of exchange plans; healthy people could start flooding the market; or the ACA could be successful at controlling provider incomes to drive down health costs.
  • The exchanges could became “Medicaid-with-premiums,” with plans paring down their networks in order to offer lower rates. This might be a positive, the Kaiser Family Foundation’s Larry Levitt tells Vox, because Medicaid plans have proven adept at identifying providers that are convenient for low-income enrollees. Yet this is less effective in rural areas with limited providers available, the Bloomberg piece notes.
  • Disaster could strike, either because of a “modified death spiral,” in which the only consumers buying insurance on the exchanges are those who receive large subsidies; a mass exodus of insurers from the marketplaces; or premium increases so significant that they bump up against the subsidy cap.

- read the Bloomberg piece
- here’s the Vox article

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