Across the country, consumers are finding that their options for health insurance through the exchanges under the Affordable Care Act (ACA) will be significantly reduced in 2018. Several large insurers have chosen to bow out of the marketplace over uncertainty involving cost-sharing reduction payments as well as financial losses incurred over the last three years. Enrollment for next year will run from November 1 through December 15. Here’s what you need to know.
Dwindling Options
A map released earlier this year and updated weekly by the Centers for Medicare and Medicaid Services (CMS) demonstrates the reduction in options across the country. As of the most recent projections, over 47 percent of counties nationwide have only one option on the exchange. This means that over 2.6 million people, about 29 percent of exchange customers, will have a choice in their insurance provider in 2018. Alaska, much of the Southeast, the Midwest and some of the Southwest will have the fewest options while those in the Northwest and Northeast will have more choices.
September 27 Deadline
Insurers have until September 27 to sign their final contracts to participate in the marketplace in 2018, but they are not required to service an entire state. Across 20 states and the District of Columbia who use the ACA marketplace, an average of just over four insurers have indicated they intend to participate, which is down from the five that said they would participate in 2017. In 2014, an average of six agreed to participate. Participation varies among insurers because one insurer is not required to cover an entire state, which is why the CMS uses counties instead to determine participation.
Premium Deadline
Although insurers have until September 27 to decide if they will participate, most states require that carriers submit their premium and service area information in May or June of 2017. This allows the market to have those services in place for January 1, 2018. Once the final contracts are signed at the end of September, premiums are locked for the entire year. Insurance companies cannot change premiums or service areas until 2019.
Congressional Debates
Although Congress did not repeal or replace the ACA, there were several bills, one of which passed the House of Representatives, that would significantly change healthcare in the United States. Although the Senate bill did not pass, it contained provisions that would not only have changed the healthcare law, but could have done so retroactively. Even though the bills did not move out of Congress, there are still questions about how the current administration will address the individual mandate as well as how insurance companies will be reimbursed for providing coverage required under the ACA.
Individual Mandate
One portion of the ACA that has been hotly contested in Congress and was a key part of the presidential campaign is the individual mandate. The individual mandate is a critical part of the ACA as it requires all Americans to have health insurance or face an IRS penalty. The idea was that people without medical problems would pay the same premiums as people with pre-existing conditions. Because healthy people need less medical care, their premiums could be used to offset the higher cost of care for sicker enrollees.
Although the efforts to repeal and replace the ACA failed, the House Appropriations Committee’s Financial Services and General Government Subcommittee passed an appropriations bill that could still go into effect. This bill would ban the IRS from using money from the budget to enforce the individual mandate. Employers and insurance companies may also be able to forgo reporting health insurance coverage to the IRS. According to experts, this would basically eliminate the mandate.
In January, President Trump signed an executive order rolling back the enforcement of certain aspects of the ACA, and the IRS appeared to be easing off enforcement in the months that followed. More recently, the IRS has insisted that it will be upholding the current law’s mandate to have coverage and collecting penalty payments as appropriate.
With no way of knowing if the individual mandate would remain in the coming years, insurers chose to leave the marketplace in 2018 rather than risk losses when healthy customers stopped paying premiums that covered people who needed costlier care.
Cost-Sharing Subsidies
Under the ACA, insurance companies receive subsidies that help offset costs for low-income customers. President Trump has promised to eliminate funding for those subsidies. Many believed that President Trump was attempting to force Democrats to negotiate with him on replacing the ACA. This led many insurance companies to increase premiums and reduce their participation in the Obamacare marketplace. The fate of these so-called cost-sharing reduction payments still remains to be seen.
Medicaid Expansion
Some have proposed that insurers would be less likely to leave the marketplace if Medicaid expansion continued. The ACA planned for Medicaid to expand in all states, but a Supreme Court decision determined that the federal government could not require states to expand their programs under new guidelines.
Under the expansion program, you could enroll in a Medicaid program if you earned up to 138 percent of the federal poverty level. People living in the 19 states that rejected expansion don’t have this option but may be able to get Medicaid if they meet their state’s specific requirements.
Because poor people are often unhealthy for various reasons – including food insecurity, lack of access to abundant medical care and lifestyle choices – having a significant number of low-income people obtaining insurance in the marketplace may have made it more expensive for insurance companies. In Alabama, for example, Blue Cross Blue Shield reports that they are spending $1.20 for every $1 they collect in premiums.
During the presidential campaign, President Trump said that if nothing was done to replace the ACA, it would eventually collapse, and the fact that millions of Americans could face limited choices for next year supports his theory. Until there is more stability from the federal government in the area of healthcare, there could be more insurers choosing not to participate in the exchanges, thus perpetuating the cycle.