Individual insurance market performance in early 2019: The Henry J. Kaiser Family Foundation

“The early years of the Affordable Care Act (ACA) exchanges and broader ACA-compliant individual market were marked by volatility. Markets in some parts of the country have remained fragile, with little competition, an insufficient number of healthy enrollees to balance those who are sick, and high premiums as a result,” Rachel Fehr, Cynthia Cox and Larry Levitt write for the Kaiser Family Foundation. “However, by 2017, the individual market generally had begun to stabilize. Despite this growing stability, in 2018 insurers raised benchmark premiums by an average of 34% in response to policy changes such as the Trump Administration’s decision to cease cost-sharing subsidy payments and reduce funding for outreach, and uncertainty over whether the ACA as a whole would remain law. These premium hikes, along with slow claims growth, made 2018 the most profitable year for individual market insurers since the ACA went into effect. Premiums fell slightly on average for 2019, as it became clear that some insurers had raised 2018 rates more than was necessary. It is likely that 2019 premiums would have dropped even more if not for two major policy changes that put upward pressure on prices: Congress’ decision to reduce the individual mandate penalty to $0 effective in 2019 and the Trump administration’s new rules allowing more loosely regulated short-term plans to expand on the individual market in competition with ACA-compliant coverage. … In this analysis, we look at financial data from the first quarter of 2019 to examine how the individual insurance market has responded to these recent changes … to look at the average premiums, claims, medical loss ratios, and gross margins from first quarter 2011 through first quarter 2019 in the individual insurance market. … These new data from the first three months of 2019 suggest that insurers in the individual market remain profitable, even with average premiums falling for the first time since the ACA was implemented. These data indicate that the individual market appears to be stable so far in 2019, despite the repeal of the individual mandate penalty and the proliferation of loosely-regulated short-term insurance plans.” Rachel Fehr, Cynthia Cox and Larry Levitt, “Individual Insurance Market Performance in Early 2019,” The Henry J. Kaiser Family Foundation.