Insurance brokers are optimistic at signs of stabilization in the market such as moderating premiums and new participating insurers, however premiums are still unaffordable for many consumers.
Since the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), changes in federal and state policy have caused disruptions and made it difficult for the health insurance market to stabilize. A recent study by the Urban Institute assessed trends in premiums, insurer participation and enrollment in seven states and included interviews with insurance brokers across the states. The brokers in the study spoke positively about moderating premiums in the individual market and the introduction of new insurer participants, which they saw as signs of stabilizing and even healthier markets. However, according to the brokers, premiums were still unaffordable for many consumers and high cost sharing deterred enrollment.
Policy. The goal of the ACA was to make insurance more affordable, adequate, and accessible. In the two years after it was implemented, enrollment in the nongroup market increased 81.5 percent, however the number declined in 2018 due to individuals with incomes too high to be eligible for subsidies leaving the market. When the ACA was implemented, states were given the power to exempt certain health plans issued after March 2010 but before 2014 (called transitional plans) from many of the ACA’s consumer protections. More recently changes such as the repeal of the individual mandate penalty, the promotion of short-term plans, and the growth of other cheaper non-ACA compliance products may have all contributed to the decline in individual market enrollment. Additionally, a number of alternative coverage options have been made available but they rend to be riskier for consumers and many brokers are reluctant, or refuse, to sell these alternative options to clients.
Brokers. Brokers reported limited incentives for selling ACA-compliance individual market products and many have stopped actively marketing their services to individual market consumers or completely discontinued selling marketplace plans. Brokers found keeping up with constantly changing public policies at the state and federal level to be challenging. They also indicated that helping consumers receive a determination of eligibility for ACA marketplace subsidies to be a long and complicated endeavor. Additionally, technical issues and glitches in the marketplace platform have been challenging. Further, prior to the enactment of the ACA, it was common for brokers to receive 10 percent of the premium for selling and servicing the plan through the life of the plan. ACA-compliant plans are subject to the medical loss ratio regulations that require at least 80 percent of premium dollars to be spent on medical care. As a result many insurers have switched to a per member, per month flat rate or a commission averaging one to two percent of a plan’s premium. This makes selling individual market plans financially unattractive for brokers.
Affordability. While premiums have declined in 2020, brokers reported that their subsidized clients were slightly worse off than they were in previous years. The amount of premium tax credits are based on the price of the benchmark plan and as the price of benchmark plans decrease, so do the premium tax credits. However, consumers who were ineligible for subsidies have been pleased with the lower costs. Brokers also reported that many of their clients were unable to afford ACA coverage, particularly those ineligible for subsidies, due to the high premiums and high cost sharing in the plans. Notably the deductibles and annual out-of-pocket maximums have increased steadily each year. Further, transitional plans which were once an affordable option for individuals have seen increased premiums as policyholders have aged and acquired health conditions. This has caused a number of healthier individuals to abandon the transitional plans, leaving sicker individuals on the plan which has in turn led to even higher premiums.
Alternative options. Beginning in January 2020, employers were allowed to offer employees an Individual Coverage Health Reimbursement Arrangement (ICHRA). This would allow employers to establish and fund a tax-exempt account that would be used to reimburse employees’ premiums for individual market, ACA-compliance coverage. However, brokers reported that very few employers were interested in ICHRAs and the brokers did not feel ready to adequately advise employers on how to implement ICHRAs. The brokers noted that coverage is better in the group market and premiums are higher in the individual markets, and adoption ICHRAs would be a step down for employees. Additionally, employees would lose eligibility for advance premium tax credits.
Brokers indicated that while short-term, limited duration plans offered a higher commission, they were mainly offered as a plan B if there were no other options for customers because of the limited duration and because they didn’t fit everyone’ needs. Brokers also indicated that they were reluctant to sell Health Care Sharing Ministries and Association Health Plans because both offered very limited coverage and often led to frustrated and unhappy clients when claims were not paid.
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