What drives insurer participation and premiums in the Federally-Facilitated Marketplace?

Association Between a Capitated, Low-cost, County-Based Public Health Insurance Option and Affordable Care Act Premium Growth in California

Importance

Empirical evidence is needed on how a capitated, risk-based county plan performs as a viable public option in the Affordable Care Act (ACA) Marketplace in California.

Objective

To estimate whether LA Care-a capitated, county-based public option and California's largest public insurer-was associated with health insurance premium growth in the Los Angeles (LA) regions of Covered California (CC), the ACA exchange in California.

Design, Setting, and Participants

This economic evaluation used ACA silver plan premium data within the 19 CC regions. Difference-in-differences and event study models used data on plan-level premiums from Health Insurance Exchange Compare for years 2014 to 2022 to estimate the association between LA Care and ACA premium growth in LA.

Exposures

The intervention was LA Care becoming the lowest-cost health plan on the ACA exchange in 2018. The treatment group included the East and West LA regions, and the control group included the remaining 17 CC regions.

Main Outcomes and Measures

The main outcome variable was annual premium growth of plans on CC from 2014 to 2022.

Results

Using 504 plan-level observations for 2014 to 2022, ACA premium growth in LA declined by 4.8% after LA Care became the lowest-cost health plan on the exchange in 2018 (coefficient estimate, -0.048; SE, 0.022; 95% CI, -0.093 to -0.002). Savings due to lower premium growth from 2019 to 2022 were calculated to be $345 million, with approximately 70% of the savings ($242 million) going to the federal government.

Conclusions and Relevance

In this economic evaluation, LA Care was associated with lower premium growth of other health insurance plans in the LA regions of CC, with the majority of savings going to the federal government. California could have captured these savings if it had applied for and received a State Innovation Waiver under section 1332 of the ACA. LA Care may be a viable public option with the potential to be expanded across California through the state's 16 other county-based health plans.

Increasing Insurance Choices In The Affordable Care Act Marketplaces, 2018-21

The Affordable Care Act (ACA) relies on insurers to offer health plans in the individual health insurance Marketplaces. Since the ACA's implementation, levels of Marketplace competition have varied, reaching a nadir in 2018. We examined the characteristics of counties that experienced changes in insurers' participation in the ACA Marketplaces from 2016 to 2021. Using data from the Kaiser Family Foundation and other sources, we found that 1,968 counties (accounting for 66 percent of the US population younger than age sixty-five) have more insurers in 2021 than in 2018, whereas only twelve counties (comprising 0.4 percent of the US nonelderly population) have fewer insurers. The number of counties with monopolist Marketplace insurers declined from 1,616 in 2018 to 294 in 2021. Recent Marketplace insurer gains were more likely in counties that lost insurers from 2016 to 2018 or had a monopolist insurer in 2018. Increased competition may lead to lower gross premiums in the ACA Marketplaces. Given the Biden administration's support for the ACA Marketplaces, it appears likely that the ACA individual health insurance market will be stable and profitable for the next several years.

How do insurance firms respond to financial risk sharing regulations? Evidence from the Affordable Care Act

Many insurance markets have reinstated premium stabilization programs to ensure financial protection from market volatility. In this paper, we focus on one such regulation-risk corridors (RCs)-in the context of the Health Insurance Marketplaces established under the Affordable Care Act. We develop a model to show how the program provided incentives for some insurers to lower their premiums. The RCs program was defunded unexpectedly for coverage year 2016, before its legislated end in 2016. Consistent with the model, we find that making a RCs claim before the program ended is associated with higher premium growth after the program's demise. The model and empirical evidence are consistent with the view that the end of the RCs program contributed to premium growth in the Marketplaces.

Individual market health plan affordability after cost-sharing reduction subsidy cuts

OBJECTIVE

To investigate how changes in insurer participation and composition as well as state policies affect health plan affordability for individual market enrollees.

DATA SOURCES

2014-2019 Qualified Health Plan Landscape Files augmented with supplementary insurer-level information.

STUDY DESIGN

We measured plan affordability for subsidized enrollees using premium spreads, the difference between the benchmark plan and the lowest cost plan, and premium levels for unsubsidized enrollees. We estimated how premium spreads and levels varied with insurer participation, insurer composition, and state policies using log-linear models for 15 222 county-years.

PRINCIPAL FINDINGS

Increased insurer participation reduces premium levels, which is beneficial for unsubsidized enrollees. However, it also reduces premium spreads, leading to lower plan affordability for subsidized enrollees. States responding to cost-sharing reduction subsidy payment cuts by increasing only silver plans' premiums increase premium spreads, particularly when premium increases are restricted to on-Marketplace silver plans. The latter approach also protects unsubsidized, off-Marketplace enrollees from experiencing premium shocks.

CONCLUSIONS

Insurer participation and insurer composition affect subsidized and unsubsidized enrollees' health plan affordability in different ways. Decisions by state regulators regarding health plan pricing can significantly affect health plan affordability for each enrollee segment.