Post-ACA we've seen significant changes in the form of switching carriers, discontinued plans, narrow "neighborhood" networks, fewer plan choices, increased premiums, elimination of commissions and reduction of carriers available. Individual and family rates are now more expensive and we are left with little to no compensation in this market.
How did we get here?
Here's a simplified look at some of the events that led us here, including:
- There were more claims with higher cost of treatment than anticipated, creating unplanned expenses for carriers.
- The marketplace and some insurers did not require proof of a qualifying event after open enrollment ended, leading to consumers purchasing coverage in anticipation of a need, then dropping coverage after treatment.
- Carriers priced their individual and family products with the anticipation of financial support from the law's Risk Corridors (that would allow carriers that were left financially vulnerable to be made whole). Unfortunately, only approximately 12% of the funds promised were paid.
- Carrier plan and rate changes created an atmosphere where consumers were compelled to switch carriers. This negated the carrier's ability to aid population health management (ex. getting a newly insured individual started on a chronic treatment then having them change carriers and start the process over again).
- The Tax Penalty for not purchasing qualified coverage is not substantial enough to change consumer behavior.
- Expansion of Medicaid. States that have expanded Medicaid have increased the enrollment in Medicaid by less than 4%, however their spending will increase this year due to the Federal Government's responsibility being reduced in 2017.
Where do we go next?
There is no magic solution for this mess, however there is an opportunity! The extremely high individual and family rates are forcing these employers to look at returning to employer-sponsored coverage that could help them save money and reap tax benefits.
Look at this real example:
| Age of Employee | 2016 Individual Rates | 2017 Individual Rates | 2017 Carrier A Rates | 2017 Carrier B Rates | 2017 Average SHOP Group Rates |
| 25 | $330 | $468 | $402 | $370 | $547 |
| 35 | $336 | $598 | $490 | $450 | $547 |
| 45 | $384 | $702 | $579 | $533 | $547 |
| 55 | $587 | $1,019 | $893 | $823 | $547 |
| Monthly Cost for Employer: | $1,637 | $2,787 | $2,364 | $2,176 | $2,190 |
Do you have a group client like this? Contact them to compare group rates with their 2017 individual rates. In today's competitive market we are here to help you with these opportunities. Use our resources below to get started.
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Comments
Great job Deb! Big topic with so many parts that have to be covered. Speaking from someone who is about to get the "gold watch" selling health care and knowing the author when she was a lowly but much appreciated minion at URL, it's been an interesting transition. As agents, let's not forget the frustration of enrolling individuals into medically underwritten health plans. Carriers that entered and exited the market when claims pushed rates above competitive thresholds leaving individuals scrambling. It certainly was not a perfect world pre-Obamacare. That said, it was not unusual to have 5-10 carriers compete for individual business and at least 5 for small group. Medical underwriting did help keep premiums down. I can remember feeling awful having to tell individuals that they could not be offered individual coverage and they would have to take a $500 plan with a $500 deductible because they were considered "High Risk". It will be interesting to see how the next administration takes on health care but let's hope they have learned that you can't make a voluntary insurance product that is based on risk and make it look like socialized medicine with handcuffs.
The only way I see this working is a return to an medically underwritten individual plans (modified with a few mandates for controlled HBP/Cholesterol with 50% bump and no pre-x), a high risk safety net for those who can pay but cannot meet acceptable risk and a skinny Medicaid (maybe through an expanded VA or look alike, where people will have access to care but it won't be a Cadillac plan that they will want to keep for any longer than they had to) plan for those who truly cannot afford it. Individual plans would be married to an enhanced HSA based with another mandate on carriers to provide 100% transparency on claims. There is no reason a consumer cannot go to a carriers website and shop for the lowest price for a Rx, X-ray/lab or other out/in patient procedure. Healthcare will never be cheap but there are some easy common sense ideas that can significantly lower the cost.