Fewer than 25 percent of insurers across the country kept the ratio of medical claims to premiums at or below a profitable threshold for their Affordable Care Act exchange policies, according to an analysis of nearly 100 healthcare plans by Politico, raising concerns that insurers will continue to sustain losses without significant policy changes.
In North Carolina, Blue Cross Blue Shield of North Carolina lost more than $400 million on its ACA policies in 2014 and 2015. Although the uninsured rate has dropped 30 percent in the state, last year BCBSNC and Aetna saw medical costs rise above 100 percent of premiums, far surpassing the 85 percent mark required for carriers to break even, according to the news outlet. In other states, like Colorado and Oregon, insurers paid out 20 percent more in medical costs than they took in for premiums.
Politico attributes the financial struggles to three issues:
- Fewer enrollees than originally predicted: The Congressional Budget Office has lowered its ACA exchange plan enrollment estimate from 21 million per month to 13 million, in part because employers did not dump their health plans as expected, and because fewer “young invincibles” signed up for coverage.
- An imbalanced risk pool: Although fewer young individuals enrolled, sicker individuals who were previously excluded from purchasing did, thanks to a cornerstone provision that prohibited insurers from denying policies to individuals with preexisting conditions. That, coupled with fewer employers dropping health plans, threw off the risk pool and left insurers that underestimated medical costs carrying the burden.
- Risk corridor payment problems: The ACA included provisions designed to protect insurers from paying the price for enrolling sicker individuals, commonly referred to as the “three R’s.” Of those, the risk corridor program ran into trouble after a Republican-led Congress limited its funding. Ultimately, the government paid just about 12 percent of what it owed to insurers, leading to lawsuits from three separate carriers.
Getting insurers back into the black requires significant policy shifts to ensure more young people enter the marketplace and insurers aren’t as burdened by high-risk members, according to Politico. Removing the provision that allows young adults to stay on their parents' insurance until 26, allowing insurers to charge older adults higher premiums and considering a public option that would expand Medicare coverage could make exchange plans profitable, but each of those changes is wrought with political implications.
- read the Politico article