Premiums in 2018: What to Expect Commonwealth Fund Teleconference June 12, 2017

Sara Collins, Ph.D. Vice President, Health Care Coverage and Access Marketplace Premiums and Insurer Participation: 2017 Experience and 2018 Projections Sara Collins, Ph.D. Vice President, Health Care Coverage and Access Commonwealth Fund Teleconference: Premiums in 2018: What to Expect June 12, 2017 There has always been uncertainty WRT

EXHIBIT 1 Percent Change in Average Monthly Premium for Second-Lowest Cost Silver Plan for a 27-Year-Old, 2016-2017 Percent Change No Medicaid Expansion Medicaid expansion State-based exchange Median = 20% Source: The Commonwealth Fund and NORC analysis of the Robert Wood Johnson Foundation’s HIX Compare 2014-2017 dataset

Counties With One Insurance Carrier, 2017 EXHIBIT 2 Counties With One Insurance Carrier, 2017 Source: A. Semanskee and C. Cox, “Insurer Participation on ACA Marketplaces, 2014-2017” Kaiser Family Foundation, June 1, 2017

2017 Premium Increases Likely a One-Time Correction EXHIBIT 3 2017 Premium Increases Likely a One-Time Correction Reinsurance program phased out: Temporary program for three years, to reimburse insurers for the cost of individuals who have unusually high claims. Risk pools became known: Insurers had more knowledge about enrollees after 3 years and adjusted prices. Under pricing in 2016: Many markets with the largest increases had below average prices in 2016. Commonwealth Fund Teleconference | June 12, 2017

2017 Markets with One Insurer: Key Factors EXHIBIT 4 2017 Markets with One Insurer: Key Factors Stiff price competition. Risk corridor payments curtailed. Consolidation pre-ACA. Low enrollment in some markets Rural status State approach to outreach and enrollment. Commonwealth Fund Teleconference | June 12, 2017

S&P Projections for 2017 Individual Market, April 2017 EXHIBIT 5 S&P Projections for 2017 Individual Market, April 2017 Signs of improvement, with most insurers reporting better 2016 results compared to 2015. 2016 and 2017 enrollment indicate that the ACA individual market is not in a “death spiral.” Insurers on average will report closer to break-even margins in 2017. Source: Deep Banerjee “The U.S. ACA Individual Market Showed Progress in 2016, But Still Needs Time to Mature,” S&P Global Market Intelligence (Apr 2017).

S&P Projections for 2018 Individual Market, April 2017 EXHIBIT 6 S&P Projections for 2018 Individual Market, April 2017 2018 premiums are projected to increase by far less than in 2017. Most counties will have at least 1 insurer in the marketplaces. More insurers will report positive (low single-digit) margins. ACA individual markets remain in early stage of development: they need certainty to stabilize. Source: Deep Banerjee “The U.S. ACA Individual Market Showed Progress in 2016, But Still Needs Time to Mature,” S&P Global Market Intelligence (Apr 2017).

EXHIBIT 7 2018 Individual Health Insurance Market Rate Filings Cori E. Uccello, MAAA, FSA, FCA, MPP Senior Health Fellow American Academy of Actuaries Commonwealth Fund Briefing: 2018 Health Insurance Marketplaces—What States, Insurers, and Consumers Should Expect June 12, 2017

Premium components Who is covered – the composition of the risk pool EXHIBIT 8 Who is covered – the composition of the risk pool Projected medical costs Other premium components—administrative costs, taxes, profit Laws and regulations

Major drivers of 2018 premium changes EXHIBIT 9 Underlying growth in health care costs (medical trend) Changes in the risk pool composition and insurer assumptions Impact of recent regulatory changes (e.g., shortened open enrollment period, tightened SEP verification requirements) Legislative and regulatory uncertainty Whether cost-sharing reductions (CSR) will continue to be funded Whether the individual mandate will continue to be enforced Whether a state has implemented a reinsurance or high-risk pool program Resumption of the health insurance tax

EXHIBIT 10 What is necessary for a stable and sustainable individual health insurance market Individual enrollment at sufficient levels and a balanced risk pool Stable regulatory environment that facilitates fair competition Sufficient insurer participation and plan offerings to provide insurer competition and consumer choice Slow spending growth and high quality of care

Recent Academy publications EXHIBIT 11 Drivers of 2018 Health Insurance Premium Changes (forthcoming) Steps Toward a More Sustainable Individual Health Insurance Market http://www.actuary.org/files/publications/Sustainable_Health_Insurance_Marketplace_042417.pdf An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes http://www.actuary.org/files/publications/Acad_eval_indiv_mkt_011817.pdf Using High-Risk Pools to Cover High-Risk Enrollees http://www.actuary.org/files/publications/HighRiskPools_021017.pdf

2018 Health Plan Rate Submissions: Effects of Policy Uncertainty EXHIBIT 12 Commonwealth Fund Teleconference 2018 Health Plan Rate Submissions: Effects of Policy Uncertainty June 12, 2017 Sabrina Corlette, J.D.

Running Down the Clock: Effects of Policy Uncertainty EXHIBIT 13 Running Down the Clock: Effects of Policy Uncertainty Rate Review: A Key Consumer Protection State rate review: purpose & scope The rate review calendar Flexible, within limits Risks and benefits for consumers

Early rate filings: What are insurers saying? EXHIBIT 14 Early rate filings: What are insurers saying? Impact of policy uncertainty Premium adjustments CSRs Individual mandate enforcement “Awareness” of insurance options Participation at risk

Future of the ACA’s Marketplaces EXHIBIT 15 Consequences for consumers Reduced choices Higher prices Worst case: no coverage at all

EXHIBIT 16 Thank you! Sabrina Corlette, J.D. Research Professor Georgetown University Center on Health Insurance Reforms Sabrina.Corlette@georgetown.edu @SabrinaCorlette 202-687-3003