ACA open enrollment starts November 1, with remarkable stability and remarkably little public attention. A thread on how we got here.
The ACA’s new insurance rules went into effect for 2014 with lower than expected premiums, a malfunctioning website, and controversy over non-compliant plans being canceled.
The Obama administration allowed non-compliant plans to continue in order to quiet the controversy over them being canceled. This kept some healthy people out of the ACA insurance market.
Insurers lost money in the individual market in the early years of the ACA, in large part because they underestimated the share of enrollees with pre-existing conditions who were newly eligible for coverage.
Federal risk corridor payment were supposed to cover a share of insurer losses, but insurers ended up getting pennies on the dollar because Congress changed the rules to make sure the program was budget neutral.
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ACA premiums increased substantially in 2017 as insurers got a handle on their costs. There were signs that this would be a one-time market correction. But, things changed after the 2016 election.
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President Trump took office in 2017 and reduced ACA outreach by 90% and funding for enrollment navigators by 84%. Exactly how big an effect this has had is unclear.
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As Republicans tried unsuccessfully to repeal the ACA, insurers increased premiums for 2018 in response to substantial uncertainty about the future of the law.
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In late 2017, Congress repealed the individual mandate penalty, so many insurers were prescient in increasing premiums in anticipation of that. But, the repeal of the penalty has not yet had as big an effect on enrollment as many anticipated.
Also in late 2017, President Trump ended cost-sharing subsidy payments to insurers, after earlier threatening to do so because it would lead to the death of the ACA and bring Democrats to the negotiating table.
Insurers responded to President Trump’s termination of cost-sharing subsidy payments by increasing premiums for ACA silver plans, which in turn increased premium subsidies. This attempt to kill the ACA backfired.
In 2018 the Trump administration expanded the availability of short-term plans that have lower premiums than ACA plans because they don’t cover pre-existing conditions or the ACA’s required benefits. Insurers raised premiums on ACA plans in response.
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ACA premium subsidies have helped to keep the insurance market relatively stable in the face of substantial premium increases. But, enrollment among middle-class people ineligible for subsidies has plummeted.
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ACA premiums have been quite stable the last couple of years. Profits rose as insurers over-corrected with prior premium increases, and insurers are now compensating for that with lower increases and in many cases decreases.
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Another factor in recent premium decreases has been reinsurance programs created by states under ACA waivers, approved by the Trump administration.
All of the relative current calm under the ACA could be completely upended if the courts overturn the law, as the Trump administration is urging.
The Trump administration seems to be struggling with painting the ACA as a failure, while at the same time taking credit for recent stability in the insurance market.
