Insurers reported surging profits in the individual market during the second quarter of 2018, easing short-term concerns about the stability of those marketplaces.
However, recent policy changes from the Trump administration—including the cancellation of cost-sharing subsidies and the individual mandate—could change the trend going forward.
That's the analysis from Kaiser Family Foundation (KFF), which compiled second-quarter financial data reported to the National Association of Insurance Commissioners in order to gauge the well-being of the individual market.
Profits have been improving since new rules on insurers were put in place in 2014. In the second quarter of this year, insurers made $155.70 per member per month, on average—a dramatic improvement from the comparative $21.40 they made in the same quarter of 2015.
That's partially because after new rules from the ACA were implemented in 2014, medical loss ratios immediately spiked. But they have dropped every year since 2015, to the point where they are now below pre-ACA levels.
"These data suggest that on average insurers in this market have met or exceeded pre-ACA individual market performance levels, and that insurers are generally now earning a profit in the individual market," KFF wrote in the brief.
The data on premiums and claims support that analysis. The gap between the two figures has been growing since 2015, enabling the profits insurers have seen.
The main caveats to this positive trend are the new policy changes put into place by the Trump administration. The abolition of the individual mandate, which was included in the 2017 tax law, and the administration's introduction of short-term insurance plans.
"If not for actions by the Trump administration and Congress, [premiums would] be decreasing even more," Larry Levitt, the senior vice president of KFF tweeted.
A brief history of ACA premiums:— Larry Levitt (@larry_levitt) October 8, 2018
2014-2016: People with pre-existing conditions get coverage and insurers underestimate the effect.
2017: A one-time market correction.
2018: Insurers overshoot with big premium increases in response to policy changes and political uncertainty.
"Repeal of the individual mandate penalty as part of tax reform legislation will take effect in 2019, combined with the expansion of loosely regulated short-term insurance plans that could siphon off healthy enrollees from the ACA-regulated individual market. These changes will increase uncertainty for insurers and push premiums up," KFF wrote in the brief.
That analysis contradicts a recent push by HHS Secretary Alex Azar, who has credited President Donald Trump with bringing stability to the ACA marketplace, arguing that "the president who was supposedly trying to sabotage the Affordable Care Act has proven better at managing it than the president who wrote the law."
Still, because premium hikes in the past few years have already been so high, KFF analysts don't expect the 2019 increase to cause too much sticker shock.
"Premium increases on average for 2019 are still likely to be modest due to the fact that insurers over-corrected with previous rate hikes and therefore cannot justify substantial further increases," the organization wrote in the issue brief.
"If not for these policy changes, it is possible that premiums on average could be flat or even decreasing in 2019," it added.