Despite Congress’ latest failure to pass an Affordable Care Act (ACA) stabilization package, some insurers have publicly stated their commitment to the individual exchanges, and experts say they think carriers are mostly in a good position to weather the challenges they face.
One headwind is the repeal of the tax penalty associated with the individual mandate, which goes into effect in 2019.
S&P analyst Deep Banerjee predicts that while the repeal won’t cause a meaningful decline in ACA exchange enrollment, insurers are likely to respond by raising their rates. It is “quite possible” that rate hikes for the second-lowest cost silver plan, also called the benchmark plan, could average in the low teens in 2019.
Another challenge is the expansion of short-term and association health plans, which might lead insurers to raise premiums. But in Banerjee’s view, this change likely won’t meaningfully alter the risk profile of the ACA marketplaces, since many exchange enrollees likely need the more comprehensive coverage afforded by ACA-compliant plans.
The impact of the lack of funding for cost-sharing reduction (CSR) payments is also limited. “I don’t think that the CSR issue is going to really be a factor” in whether some insurers decide to exit the exchanges, says Chiquita Brooks-LaSure at Manatt Health, who helped implement the ACA as part of the Obama administration.
However, unsubsidized enrollees would be hurt disproportionately. For instance, in Washington, only 60% enrollees are subsidy-eligible, while the remaining 40% would have to bear the full brunt of premium hikes.
To ensure that the ACA exchanges continues to be viable markets for both insurers and consumers, allocating funding for reinsurance is “one of the key things that Congress could do,” Brooks-LaSure says. It is also important to retain robust outreach to consumers.