As the companies that remain on the market have gained more experience with the individual and small group market risk pools, and have set higher premiums for exchange plans, their gross profit margins have increased. The Council of Economic Advisors said that the fact that premiums continue to rise “is a clear sign of a distorted market that involves larger transfers from taxpayers to insurers.”
The White House’s Council of Economic Advisers (CEA), an agency within the Executive Office of the President, has issued a new report on the profitability of health insurance companies, and said that health insurer profitability in the individual market has risen since the implementation of the Affordable Care Act (ACA).
Initially, health insurance companies had difficulty turning a profit in the individual and small groups markets after implementation of the ACA, largely because insurers were unsure how to price plans that met the newly instituted ACA requirements. CEA said that some companies underpriced products relative to enrollees’ health needs, and others left the individual marketplace altogether.
However, for the companies that remained in the market, the ACA created new opportunities for financial growth, according CEA, by funding much of the cost associated with implementing the ACA through government monies.
In the small group and individual market, the ACA provided subsidies to lower the cost of premiums for people with lower incomes who purchased plans on the exchanges. According to CEA, approximately 85% of people who purchased plans on the exchanges qualified for taxpayer-funded premium subsidies.
Additionally, more lower-income, able-bodied, working-age adults gained coverage under the ACA’s Medicaid expansion. Between 2014 and 2016, federal funds paid for the premiums associated with the Medicaid expansion, and today pays approximately 94% of these premiums.
After adjusting to the new market, insurers’ financial health—which the CEA report measured by stock prices—surpassed pre-ACA levels; from January 2014 to January 2018, the stock prices of health insurance companies rose by a cumulative 272%, outperforming the Standard & Poor 500 index by 106%. The CEA predicts that the largest health insurance companies will see their net income increase by 8.7% to 19.6% in 2018 over last years’ numbers, though it notes that “a significant portion” of this increase will be driven by recent tax reform.
As the companies that remain on the market have gained more experience with the individual and small group market risk pools, and have set higher premiums for exchange plans, their gross profit margins have increased. The CEA said that the fact that premiums continue to rise “is a clear sign of a distorted market that involves larger transfers from taxpayers to insurers.”
The CEA report’s findings stand in contrast a recent Robert Wood Johnson Foundation (RWJF) report on the insurers that remain in the ACA markets. According to RWJF, it was the anticipated rollback of the ACA’s individual mandate that led insurers to set higher premiums for 2018, and that will likely push premiums even higher in 2019. The mid-2017 loss of the ACA’s cost-sharing reduction payments, say RWJF, also drove premium increases.
In general, said RWJF, “Insurers are confident that given greater certainty about the direction of federal policy, they can continue to offer marketplace coverage and set premiums that accurately reflect their risk.”
However, insurers currently lack that certainty; in the days ahead, concluded the report, “Insurers will be watching closely how consumers respond to the lack of an individual mandate and the availability of new coverage options; a worsening of the marketplace risk pool will likely cause many insurers to reduce their market presence, will cause all to increase premiums, and may lead to more exits.”
California Aims for Equity by Redefining Cancer Care
December 8th 2023Authors highlight key aspects of the California Cancer Care Equity Act, including its focus on Medi-Cal beneficiaries, the requirement for managed care plans to contract with specialized cancer centers, and the definition of complex cancers.
Read More
Oncology Onward: A Conversation With Thyme Care CEO and Cofounder Robin Shah
October 2nd 2023Robin Shah, CEO of Thyme Care, which he founded in 2020 with Bobby Green, MD, president and chief medical officer, joins hosts Emeline Aviki, MD, MBA, and Stephen Schleicher, MD, MBA, to discuss his evolution as an entrepreneur in oncology care innovation and his goal of positively changing how patients experience the cancer system.
Listen
Patients With RA in Remission Withdrawing From TNF Inhibition Show Flare Increases
December 8th 2023New data presented at ACR 2023 highlighted the differences in rates of flares and Boolean 2.0 remission rates compared to patients with rheumatoid arthritis who continued a tumor necrosis factor inhibitor (TNFi).
Read More
Insufficient Data, Disparities Plague Lung Cancer Risk Factor Documentation
September 24th 2023On this episode of Managed Care Cast, we speak with the senior author of a study published in the September 2023 issue of The American Journal of Managed Care® on the importance of adequate and effective lung cancer risk factor documentation to determine a patient's eligibility for screening.
Listen
Research Reveals the Role of Structural Racism in Lung Cancer Risk
December 7th 2023Spanning 22 studies, the analysis illuminated housing disparities, occupational hazards, unequal health care access, economic inequality, and discriminatory industry practices and how they collectively contribute to heightened lung cancer risks.
Read More
Refining Precision Prevention for Benign Breast Disease
December 7th 2023Many questions remain surrounding accurately classifying the risk of developing invasive breast cancer associated with the benign breast disease diagnoses of nonproliferative lesions and proliferative changes without atypia.
Read More
California Aims for Equity by Redefining Cancer Care
December 8th 2023Authors highlight key aspects of the California Cancer Care Equity Act, including its focus on Medi-Cal beneficiaries, the requirement for managed care plans to contract with specialized cancer centers, and the definition of complex cancers.
Read More
Oncology Onward: A Conversation With Thyme Care CEO and Cofounder Robin Shah
October 2nd 2023Robin Shah, CEO of Thyme Care, which he founded in 2020 with Bobby Green, MD, president and chief medical officer, joins hosts Emeline Aviki, MD, MBA, and Stephen Schleicher, MD, MBA, to discuss his evolution as an entrepreneur in oncology care innovation and his goal of positively changing how patients experience the cancer system.
Listen
Patients With RA in Remission Withdrawing From TNF Inhibition Show Flare Increases
December 8th 2023New data presented at ACR 2023 highlighted the differences in rates of flares and Boolean 2.0 remission rates compared to patients with rheumatoid arthritis who continued a tumor necrosis factor inhibitor (TNFi).
Read More
Insufficient Data, Disparities Plague Lung Cancer Risk Factor Documentation
September 24th 2023On this episode of Managed Care Cast, we speak with the senior author of a study published in the September 2023 issue of The American Journal of Managed Care® on the importance of adequate and effective lung cancer risk factor documentation to determine a patient's eligibility for screening.
Listen
Research Reveals the Role of Structural Racism in Lung Cancer Risk
December 7th 2023Spanning 22 studies, the analysis illuminated housing disparities, occupational hazards, unequal health care access, economic inequality, and discriminatory industry practices and how they collectively contribute to heightened lung cancer risks.
Read More
Refining Precision Prevention for Benign Breast Disease
December 7th 2023Many questions remain surrounding accurately classifying the risk of developing invasive breast cancer associated with the benign breast disease diagnoses of nonproliferative lesions and proliferative changes without atypia.
Read More
2 Clarke Drive
Cranbury, NJ 08512