Data from the first three years of Affordable Care Act marketplace plans will provide insurers a clearer picture of healthcare costs, allowing for more accurate premium pricing for 2017 that could offer sustainability within the marketplace, according to a report from the Kaiser Family Foundation (KFF).
Insurers have struggled to accurately calculate premiums over the last three years due to widespread uncertainty regarding the health status of new enrollees coupled with federal risk adjustment and reinsurance programs that added another layer of ambiguity. As a result, several of the largest insurers experienced individual market losses in 2014 and 2015, leading UnitedHealthcare to pull out of exchanges in all but a few states for 2017.
Policy experts say additional data collected over the past three years will offer more certainty as insurers attempt to align premiums with healthcare costs, although substantial premium increases could drive away healthy enrollees, altering the risk pool. Insurers will also consider changes in healthcare costs, which is projected to see a moderate increase of 3-5 percent. In some areas, United's exit from state exchanges may lead to larger premium growth due to decreased competition.
Policy changes, including more rigorous enforcement of the special enrollment period and the conclusion of the reinsurance program, will provide an added twist. The reinsurance program paid out $7.7 billion in 2015, which helped reduce premiums by 4-6 percent in 2016, the report notes.
Industry experts have predicted higher than usual premium increases for 2017, with insurers in some states already proposing double-digit hikes. But KFF policy experts argue that higher premium increases in 2017 "can be seen as something akin to a one-time market correction," allowing insurers to become profitable and bringing stability to the marketplace.
- read the KFF report
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