Home Health Care ACA health plans still profitable in spite of legal challenges to law

ACA health plans still profitable in spite of legal challenges to law

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The Affordable Care Act and its associated health insurance exchanges have been a major target for Trump Administration policies meant to undermine the 2010 law.

Moves like the cutting funding for consumer education on open enrollment, reducing cost sharing subsidies, zeroing out the individual mandate penalty and the emergence on non-ACA compliant short-term health plans have led to some fretting about whether the exchanges and the overall law can survive.

Last year, represented a record high in insurer profitability on the exchanges and 2019 average premiums fell slightly as a result. Still – for now at least – it appears that insurers offering plans on the individual exchanges continue to be profitable.

A Kaiser Family Foundation analysis of the individual insurance market found that in the first three months of 2019, medical-loss ratios for insurers landed at 73 percent.

While that number could rise through the rest of the year, the percentage is lower than the first few years of the ACA and signal an upward trajectory for participating insurers.

KFF also analysed average gross margins on a per member per month basis, essentially how much premiums outstrip claim costs for each enrollee.

The $134.30 individual gross margins for the first three months of 2019 are higher than any other year of the ACA’s existence other than 2018.

When it comes to which insurers are standing out, the KFF found that Blue Cross Blue Shield affiliates have had consistently higher gross margins than competitors. For the first quarter of 2019, the gap in average gross margins per member per month was $56 between Blue and non-Blue plans.

Average monthly premiums fell from $490 to $488 between 2018 and the first part of 2019, while claims have risen from $336 to $354.

That increase in claims suggests that the repeal of the individual mandate penalty did not lead to the mass exodus of healthy members from the insurance exchange that some observers feared.

“Taken together, these data suggest that the individual market risk pool is relatively stable, though sicker on average than the pre-ACA market, which is to be expected since people with pre-existing conditions have guaranteed access to coverage under the ACA,” the report states.

“(E)arlier concerns that the market would collapse or insurer exits would lead to counties with no coverage available at all have proven unfounded.”

To be sure, structural problems exist within the ACA exchanges, especially in rural areas where there is limited competition among insurance providers, but KFF’s data illustrates that the program remain stable for the time being.

However, the overall status of the ACA remains in flux after U.S. District Court Judge Reed O’Connor ruled that the sweeping law was unconstitutional last December. The statute remains in place during the appeals process, which is headed next to the 5th U.S. Circuit Court of Appeals.

Picture: tomertu, Getty Images

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