ACA Costs after 2017
December 4, 2014 Leave a comment
Steve Parente has an op-ed on the ACA in today’s Raleigh, N.C. News and Observer. I read it several times and there are many sentences in it with which I agree, but it is hard for me to devine his main point. I think the shorter version is “The ACA hasn’t been the disaster for premium increases that I and many detractors predicted this year, but after 2017 when reinsurance and risk corridors go away it will then be a disaster.”
Maybe. And the answer will differ by State.
The story of the ACA is increasingly a state-level story. North Carolina has higher premiums than many states because we have so little competition (only 1 insurer, BCBS NC offered plans in all 100 counties in 2014 exchanges, and only 1 other insurer offered plans in around 35 others). After risk corridors go away (essentially a floor below which an insurance company can’t loose, and a ceiling on profits) the premiums offered may go up. [as an aside, I saw a presentation of a large private exchange provider this week, and they are using reinsurance and risk corridors and said that was the only way to get private insurers to participate; more on that later]. Alternatively, competition for health insurance might work, and premiums might be lower than whatever rate would constitute a disaster.
3 years ago, BCBS NC sold over 90% of the individual policies in the state. The second open enrollment period in North Carolina has 1 new insurer entrant, United, that is selling in 90 of 100 counties, and around 35 counties have 3 insurers offering plans. Will there be more entrants? Will people shop around or auto enroll? Will uncertainty about continuing litigation cause people to not buy coverage? How will politicians respond to however the looming Supreme Court litigation turns out?
All important questions. Steve ends by saying “the debate about the Affordable Care Act is nowhere close to ending”. This is undoubtedly true, and hopefully the debate will eventually mature into a discussion of what works, what doesn’t and what practical fixes can be agreed upon, as opposed to a general discussion of “supporting” or “opposing” the ACA.