By Erin Mershon, CQ Roll Call
August 11, 2016—Federal officials are heralding a new analysis that suggests the government-run insurance exchanges attracted a healthier pool of customers in their second year of operation. The officials say the data could counter industry concerns about the viability of the exchanges—and that it suggests premium increases for health law marketplace plans could also stabilize.
Medical costs for individuals who purchased health insurance in the marketplaces stayed essentially unchanged between 2014 and 2015, even as medical costs in broader insurance markets rose by as much as 6 percent, the data shows.
That suggests that the so-called risk pool—a measure of how well healthy consumers balance the costs of sick consumers—improved between those years, as more people signed up for coverage under the 2010 health care law. It could continue to improve as enrollment continues to grow, officials suggested.
Federal health officials have fielded years of insurers' complaints that the marketplace consumers are sicker and costlier than those in other markets. Medical costs and the strength of the risk pool are major factors in how insurance companies set their premiums, and this year, premium hikes into the double digits remain a chief concern for regulators and others hoping to make insurance products more affordable.
The risk pool has also been a factor in several plans' decisions to leave the marketplaces in several states, including UnitedHealth Inc.'s exodus from more than 30 states for 2017.
"Growth in enrollment is leading to a broader, healthier risk pool and that is bringing down costs," said Aviva Aron-Dine, senior counselor to the secretary at the Department of Health and Human Services (HHS). "A risk pool getting stronger does not guarantee [insurer] profitability, but it is a promising sign for the overall health of the marketplace."
A stronger risk pool should help keep premium costs more stable, Aron-Dine said. She acknowledged that there are other factors contributing to premium increases, including the phase-down of the so-called reinsurance program and efforts to make up for prices that may have been too low in prior years.
The data isn't shocking, Aron-Dine admitted. Because of the troubled technological rollout of the health law insurance portal HealthCare.gov, in many cases only the sickest consumers persisted in getting coverage in 2014, the first year it was available. It makes sense, then, that healthier people would sign up in 2015 and the risk pool would improve, Aron-Dine said.
The data also reflects just one year of marketplace trends, and arguably one of the most volatile years, given the glitches in rollout of the website and their effect on enrollment. The figures were calculated based on the claims data insurers submitted to participate in two premium stabilization programs of the health law, it's so-called reinsurance and risk corridor programs. Those figures are not yet available for 2016.
But HHS emphasized as its "most powerful evidence" data showing that the trend was more pronounced in states that saw higher enrollment growth. In the 10 states with the highest enrollment growth in 2015, medical costs per enrollee per month actually fell by 5 percent, compared with a broader 0.1 percent decrease in medical costs across all states.
HHS also highlighted that the improvements in the risk pool shown in the data predated several federal policy changes aimed at further improving the risk pool and addressing insurers' complaints. This year, the agency has tightened its rules around special enrollment periods that let people sign up for coverage outside of the annual open enrollment period. It has also improved data matching efforts and changed the way it reaches out to Medicare-eligible enrollees.
America's Health Insurance Plans CEO Marilyn Tavenner termed the report "overly optimistic."
"The reality is that the risk pool has not significantly improved. That is a serious concern," she said. "This analysis also overlooks the current challenges that are driving up premiums for consumers, including the state of the risk pool at the local level and the lack of pre-enrollment verification for special enrollment periods. We need policy solutions that will address the affordability concerns facing consumers, and that starts by tackling these issues directly."