Getting managed care insurers to jump into the Affordable Care Act exchanges could drive down premiums, according to a new study.
A new report from the Urban Institute and the Robert Wood Johnson Foundation (RWJF) notes that as the number of insurers participating in individual ACA insurance marketplaces has decreased over time, premiums for enrollees have gone up.
The authors of the latest RWJF analysis hypothesize that if more Medicaid insurers could be convinced to join marketplaces, it could have a big impacts on premiums. However, these payers are hesitant, as ACA plans are substantially different to operate.
The research highlights 15 states where marketplace premiums are higher than the national average and Medicaid managed care organizations (MMCOs) either do not offer coverage or offer coverage in limited areas. On the flip side, data show that the 10 states with the lowest average premiums have MMCOs that broadly cover the marketplace.
“As policymakers grapple with affordable ways to expand coverage, they may consider ways to incentivize Medicaid insurers to expand their offerings,” Mona Shah, senior program officer at RWJF, said in a statement. “If Medicaid managed care plans offer coverage to more people and in more places, it could help protect consumers from higher healthcare costs.”
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Some insurers in the study said Medicaid is more attractive than ACA marketplaces because its more stable and has less regulation. Plus, some Medicaid MMCOs express concern over the marketing and pricing associated with marketplaces.
“At the end of the day, the Medicaid [program] is much more stable and has a clear delineation of rules and regulations that gives you, the health plan organization, a fighting chance to make a profit. Whereas the marketplace—because of the dynamics of the risk that you’re taking on in the population—the risk volatility is much higher in the marketplace versus that of the Medicaid [program],” one insurance respondent said in the report.
So what else turns insurers against marketplaces?
First, marketplace insurers need more sophisticated staff to price plans, whereas states often use insurers’ current rates to set Medicaid prices. Second, marketplace insurers must be able to collect premiums, and Medicaid plans are available without a premium.
Third, marketplace insurers must obtain special insurance licenses and have larger reserves for financial losses. In addition, marketplace insurers must compete for enrollees. Finally, marketplace insurers face more financial risk.
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The authors conclude that Medicaid insurers may prefer a Medicaid buy-in program to ACA marketplaces due in large part to their less-stringent requirements for enrolling new customers.
Interviewees had conflicting views on whether insurers that offer Medicaid plans should be required to offer Medicaid buy-in coverage:
“Despite enthusiasm for the concept of a Medicaid buy-in program, Medicaid insurers said their decisions about whether to participate in such programs would ultimately be driven by the specific details of these programs,” the report stated.