Even with the help of substantial subsidies, health insurers suffered significantly greater financial losses on qualified health plans in the individual market compared to near-identical policies in the small-group market, according to a newly released study.
The study, from George Mason University’s Mercatus Center, analyzes 2014 data from the federal government to compare the financial performance of 174 insurers that offered QHP coverage to both individuals and small groups. It found that individual QHPs had loss ratios of 110 percent, compared to 82 percent for group QHPs and 83 percent for individual non-QHPs.
The main culprit, the researchers say, is that per-enrollee medical claims were 93 percent higher for individual QHPs than for individual non-QHPs as well as 24 percent higher for individual QHPs than for group QHPs. This is in spite of the fact that insurers received larger-than-expected per-enrollee payments for their individual QHPs through the Affordable Care Act’s reinsurance program--equal to more than 20 percent of total individual QHP premium income.
Even though the study relied on data from the first full year of ACA implementation, the findings also don’t bode well for the future stability of the ACA exchanges, the researchers argue. “Because insurers experienced even larger losses selling individual QHPs in 2015 than they did in 2014, our findings suggest that 2017 could be a challenging year for the ACA, particularly since the reinsurance program ends in 2016,” they write.
And this could lead premiums to rise and further drive away younger, healthier consumers, the study adds. “To avoid such an outcome, it is increasingly likely that the individual insurance market changes made by the ACA will have to be revised or reversed,” the researchers conclude in a study summary.
Indeed, prominent insurers UnitedHealth and Humana will pull back their public exchange presence for next year, and just this week Blue Cross Blue Shield of Minnesota drastically pared down its individual market offerings for 2017. The leaders of other major insurers like Aetna, though, have indicated it is too early to give up on the public exchange market.