If you are keeping score, the number of areas in the country that will not be able to offer public-exchange health plans in 2018 due to lack of carrier participation in those exchanges is racking up. The most recent announcement included two of 39 counties in Washington State, on the heels of similar announcements impacting about 18 counties in Ohio and 25 in Missouri, plus the situation in Iowa. These gaps are detrimental to residents who qualify for subsidized coverage but don’t have even one plan option.
Meanwhile, June 21 is the deadline for insurers to commit to offering products in the Federal and State Health Insurance Exchanges for 2018. Without offerings from at least one insurer in an exchange, tax subsidies for individual coverage would be unavailable in that market, although some insurance products may continue to be available in the “off-exchange” individual market.
In turn, insurers are watching Congress and litigation concerning the funding of cost-sharing subsidies, House of Reps. v. Price. A new Oliver Wyman survey of health insurers indicates that the vast majority of insurers intend to stay in the Marketplaces, but “new information or policy developments could change their assessment.” Indeed, Aetna and Humana declined to participate in any exchange market in 2018 given the Administration’s request to delay a court hearing on the case. Other insurers are already “recalibrating” their strategy regarding the products they intend to offer through the marketplaces based on their experience in the marketplaces over the last three years. That may look like increased rates, entry to new markets or exit from existing markets. Passage of the American Health Care Act, or legislation like it, could alter the landscape further.
But if an insurer exits a market, wouldn’t they be banned from participating for a period of years?
Fortunately, no. While the guaranteed renewability rules dating back to the Health Insurance Portability and Accountability Act of 1996 state that, if an insurer decides to leave the individual market entirely in a state they are prevented from reentering for five years, CMS did relax these rules last year (in its annual Notice of Benefits and Payments Parameters). Experts believe that if an insurer maintains a product in a State -- even if it isn’t in the marketplace -- the insurer would not be prevented from reentering the marketplace before a five-year period elapsed. One of our favorite fellow bloggers on health policy described the very technical changes to these rules earlier this year.
The good news is that insurance analysts are bullish on the long-term viability of the individual market. That’s important to employers because their former employees rely on the individual market for pre-65 retiree medical and COBRA alternatives. In addition, employers have serious concerns about cost shifting should the individual market collapse.
For a detailed overview of how the current administration’s policies are having an impact on insurance companies, check out this article by Julie Rovner in Kaiser Health News. The combination of President Trump’s executive order authorizing the IRS to back off enforcement of individual mandate penalties and the continuing delays in resolving funding for the cost-sharing subsidies (aka CSRs) that the insurance companies are required by law to reimburse are the most recent contributors to the insurers’ decisions not to participate in the exchanges.