Individual Health Insurance Market Research Articles

Health insurance market structure and state-based public option laws: evidence from Washington State

ABSTRACT In response to political gridlock at the federal level and concerns about market concentration in the private health insurance industry, several U.S. states have proposed their own bills to establish state-based public option programs, including three that recently became law in Washington State, Colorado, and Nevada. I study Washington State’s Cascade Care Law, which implemented a state-based public option program in its individual health insurance market starting in 2021. I use plan offering data and administrative enrollment data from the Washington Health Benefit Exchange, Washington’s state-based Affordable Care Act exchange, to provide a descriptive analysis of how market structure, insurers’ plan offering decisions, individual enrollment, and market concentration evolved during the 2020–2022 plan years. A key descriptive finding of this paper is that county-level insurance market competition has improved since Washington’s state-based public option program was implemented; with thirteen and twelve insurers offering plans in 2021 and 2022, respectively, up from nine insurers in 2020. I also document considerable variation in the set of plans insurers decided to offer and the set of counties they served. Enrollment in the public option plans that were offered was low.

Sources of inertia in the individual health insurance market

Consumers in private health insurance markets are highly inertial. The literature has repeatedly found consumers are willing to pay thousands of dollars to keep their health plan. However, the causes of inertia are not well understood, despite their importance in determining whether welfare can be improved by reducing inertia and which types of policies would be effective in doing so. Using administrative data from California’s Health Insurance Marketplace, we separately identify three sources of inertia—tastes for provider continuity, inattention, and hassle costs—using two-stage models of inattention and health plan choice. We find that eliminating inattention and hassle costs would reduce repeated health plan choice by 53 percentage points and that interventions to reduce inattention and hassle costs are complements. Inattention and hassle costs cost consumers over a billion dollars in foregone consumer surplus in 2018, roughly $1,790 per household per year or half the annual premium paid by the median household, with inattention accounting for the largest source of forgone surplus. We conclude that interventions to reduce inertial plan choice should jointly focus on hassle costs and particularly inattention, but not tastes for provider continuity.

Association Between Provider-Sponsored Health Plan Ownership and Health Insurance Marketplace Plan Quality.

Over 15.3 million Americans relied on the individual health insurance market for health coverage in 2021. Yet, little is known about the relationships between the organizational characteristics of individual market health insurers and quality of coverage, particularly with respect to clinical outcomes. To examine variation in marketplace insurers' quality performance and investigate how performance varies by insurer organizational characteristics. Retrospective cohort study. 381 insurer products, representing 184 unique insurers in 50 states in 2019 and 2020. Marketplace plan clinical quality measures reported in the 2019-2020 CMS Plan Quality Rating System dataset and insurer-product organizational attributes identified from several data sources, including non-profit ownership, Blue Cross Blue Shield Association membership, Medicaid focus and whether or not the insurer product is vertically integrated with a provider organization. Among the 381 insurer products in this study, 35% are part of a provider-sponsored health plan (PSHP) and 70% of these entities received four stars or above for overall quality performance. Overall, PSHPs exhibited higher quality than non-PSHPs for both clinical quality management (0.36 increased on a 5-point scale; 95% CI = 0.11 to 0.62; P = 0.005) and enrollee experience (0.27; 95% CI = 0.03 to 0.50; P = 0.03) summary indicators. Medicaid focused insurers were associated with lower performance on enrollee experience, plan administration, and various outcomes related to clinical quality. Provider-sponsored health plans in the health insurance marketplaces are associated with higher-quality care, as measured by CMS clinical quality measures.

Increasing Insurance Choices In The Affordable Care Act Marketplaces, 2018-21.

The Affordable Care Act (ACA) relies on insurers to offer health plans in the individual health insurance Marketplaces. Since the ACA's implementation, levels of Marketplace competition have varied, reaching a nadir in 2018. We examined the characteristics of counties that experienced changes in insurers' participation in the ACA Marketplaces from 2016 to 2021. Using data from the Kaiser Family Foundation and other sources, we found that 1,968 counties (accounting for 66percent of the US population younger than age sixty-five) have more insurers in 2021 than in 2018, whereas only twelve counties (comprising 0.4percent of the US nonelderly population) have fewer insurers. The number of counties with monopolist Marketplace insurers declined from 1,616 in 2018 to 294 in 2021. Recent Marketplace insurer gains were more likely in counties that lost insurers from 2016 to 2018 or had a monopolist insurer in 2018. Increased competition may lead to lower gross premiums in the ACA Marketplaces. Given the Biden administration's support for the ACA Marketplaces, it appears likely that the ACA individual health insurance market will be stable and profitable for the next several years.

Individual Health Insurance Market Reinsurance After the Passage of the American Rescue Plan Act

Individual Health Insurance Market Reinsurance After the Passage of the American Rescue Plan Act

Sources of Inertia in Health Plan Choice in the Individual Health Insurance Market

Sources of Inertia in Health Plan Choice in the Individual Health Insurance Market

A espiral de antisseleção no mercado brasileiro de planos de saúde individuais

The anti-selection in the health insurance market can be a perverse phenomenon and compromising the balance of the insurance portfolio. The possibility of growing this effect is associated with the measures to guarantee the renewal of the policy and to establish a cross subsidy between the types of risks. The objective is to evaluate possible effects of the introduction of popular healthcare insurance plans in the Brazilian individual health insurance market. The results did not suggest the presence of intergenerational subsidies. But if it would be introduced products with more competitive relative prices than the current ones, the anti-selective movement of policyholders is such that it jeopardizes, without exception. Therefore, there is evidence of a clear spiral movement with deterioration of current portfolios.

The ACA's Effect On The Individual Insurance Market.

The vision of the Affordable Care Act (ACA) for a reformed individual health insurance market included requirements and incentives for insurers to manage risk instead of avoiding it, minimum standards for coverage adequacy, income-related subsidies, managed competition through health insurance Marketplaces, and new programs to promote insurer competition. Against this vision, we assessed how insurance markets evolved between 2014 and 2019, using metrics such as premium changes, insurer participation, and enrollment. We also assessed how federal and state policy choices during the implementation of the ACA may have affected market performance. The article closes with an assessment of recent federal-level policy choices and the evidence to date about their effect on insurance markets, together with a discussion of how market experience under the ACA can inform policy makers who seek to further expand consumers' access to affordable, comprehensive coverage.

Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market.

One of the Affordable Care Act’s (ACA) signature reforms was creating centralized Health Insurance Marketplaces to offer comprehensive coverage in the form of comprehensive insurance complying with the ACA’s coverage standards. Yet, even after the ACA’s implementation, millions of people were covered through noncompliant plans, primarily in the form of continued enrollment in “grandmothered” and “grandfathered” plans that predated ACA’s full implementation and were allowed under federal and state regulations. Newly proposed and enacted federal legislation may grow the noncompliant segment in future years, and the employment losses of 2020 may grow reliance on individual market coverage further. These factors make it important to understand how the noncompliant segment affects the compliant segment, including the Marketplaces. We show, first, that the noncompliant segment of the individual insurance market substantially outperformed the compliant segment, charging lower premiums but with vastly lower costs, suggesting that insurers have a strong incentive to enter the noncompliant segment. We show, next, that state’s decisions to allow grandmothered plans is associated with stronger financial performance of the noncompliant market, but weaker performance of the compliant segment, as noncompliant plans attract lower-cost enrollees. This finding indicates important linkages between the noncompliant and compliant segments and highlights the role state policy can play in the individual insurance market. Taken together, our results point to substantial cream-skimming, with noncompliant plans enrolling the healthiest enrollees, resulting in higher average claims cost in the compliant segment.

California's New Gold Rush: Marketplace Enrollees Switch To Gold-Tier Plans In Response To Insurance Premium Changes.

The individual health insurance market has grown significantly since the 2014 implementation of the Affordable Care Act's state-based and federally facilitated Marketplaces. During annual open enrollment periods, Marketplace enrollees can switch plans for the upcoming year. The percentage of reenrollees in California's state-based Marketplace, Covered California, who made changes to their coverage steadily increased between the 2014-15 and 2017-18 open enrollment periods. Following the implementation of "silver loading"-in which insurers raised 2018 silver-tier plan premiums to compensate for their loss of federal payments for cost-sharing reductions-the proportion of consumers who moved into gold plans during the 2017-18 open enrollment period dramatically increased, compared to previous years. Among bronze or silver plan enrollees who switched metal tiers during open enrollment, those who could enroll in gold plans that were no more than $49 per month more expensive than their initial bronze or silver plan had a significantly higher probability of switching to gold coverage than those who faced larger premium differences.

Decision-Making Experiences Of Consumers Choosing Individual-Market Health Insurance Plans.

The health insurance Marketplaces established by the Affordable Care Act include features designed to simplify the process of choosing a health plan in the individual, or nongroup, insurance market. While most individual health insurance enrollees purchase plans through the federal and state-based Marketplaces, millions also purchase plans directly from an insurance carrier (off Marketplace). This study was a descriptive comparison of the decision-making processes and shopping experiences of consumers in two states who purchased a health insurance plan from the same large insurer in 2017, either through the federal Marketplaces or off Marketplace. In a survey, those who selected plans through the Marketplaces reported less difficulty finding the best or most affordable plan than did those enrolling off Marketplace. Respondents in families with chronic health conditions who enrolled through the Marketplaces reported better overall experiences than those who enrolled off Marketplace. Respondents with low health insurance literacy reported poor experiences in enrolling both through the Marketplaces and off Marketplace. Access to consumer assistance in the individual health insurance market should target off-Marketplace populations as well as all populations with low health insurance literacy.

The differential effects of medical loss ratio regulation on the individual health insurance market

The federal Affordable Care Act (ACA) imposed many new regulations on the health insurance marketplace, including a minimum medical loss ratio (MLR) requirement. However, several states had minimum MLR regulations in place prior to the enactment of the ACA. In this paper, we examine whether insurers operating in states with pre-ACA MLR regulations were better able to adapt to the new MLR requirements imposed by the ACA. We find evidence that state MLR requirements have adversely affected insurer market share. We also find that insurers operating in states without existing MLR requirements experienced decreases in market share relative to insurers operating in states with MLR requirements. Finally, there is evidence of a differential effect of the state and federal MLR requirements based on the extent of market share, with smaller insurers being more adversely affected.

Estimated Costs of a Reinsurance Program to Stabilize the Individual Health Insurance Market: National- and State-Level Estimates.

Reinsurance, an insurance product designed to protect health insurers against the financial risk of covering high-cost enrollees, has attracted bipartisan policy interest as a mechanism to stabilize individual health insurance markets. Three states—Alaska, Minnesota, and Oregon—have implemented state-based reinsurance programs under the Affordable Care Act’s 1332 State Innovation Waivers, and reinsurance waivers have been approved though not yet enacted in Maine, Maryland, New Jersey, and Wisconsin. In this article, we estimate the costs of implementing national and state-based reinsurance programs using health spending data from the 2007-2016 Medical Expenditure Panel Survey and state demographic and health insurance coverage data from the 2015-2017 Current Population Survey Annual Social and Economic Supplement. We project that a reinsurance program with an 80% payment rate for expenditures between $40,000 and $250,000 would cost $30.1 billion from 2020-2022. We observed considerable variation in reinsurance programs and estimated costs between the 4 states we examined: California, Florida, Illinois, and Texas. Our projections provide updated estimates of the costs of implementing federal reinsurance programs for the individual health insurance market.

MEDICARE-FOR-ALL: PROPOSALS, POLITICS AND TRADEOFFS

Discussants: P. Neuman1, R. Frank2, K. Pollitz3, 1. Kaiser Family Foundation, Washington, District of Columbia, United States, 2. Harvard Medical School, Boston, Massachusetts, United States There is growing national interest in expanding Medicare as a strategy to stabilize and expand health insurance coverage and lower costs. Whether “Medicare for All,” or a “Medicare Buy-in” for people under 65, the proposals share the belief that Medicare is a system that we can build on for a broader population of beneficiaries. These ideas will become more prominent as elections pose the question of what’s next following the Affordable Care Act. This symposium offers several perspectives on these various proposals. John Rother, chair and moderator, reviews the history of the idea that Medicare should be the building block for a broader health-care insurance system. Tricia Neuman provides an overview of leading proposals, highlights key differences, and discusses the potential implications for the Medicare program and its beneficiaries. She reviews public opinion polling data on the various proposals, including positions held by the major political parties. Karen Pollitz discusses the implications of these proposals for the individual health insurance market, employer-based markets, and government programs such as Medicaid and the VA. Richard Frank addresses the broader economic implications of these proposals, including differences in administrative costs of Medicare vs. the private insurance system and the potential effects on health care organizations. The panel discussion that follows addresses trade-offs, including the likely opposition of acute-care providers and physicians’ organizations as well as current Medicare beneficiaries. There will be opportunity for questions and comments from the floor.

Television Advertising and Health Insurance Marketplace Consumer Engagement in Kentucky: A Natural Experiment.

BackgroundReductions in health insurance enrollment outreach could have negative effects on the individual health insurance market. Specifically, consumers may not be informed about the availability of coverage, and if some healthier consumers fail to enroll, there could be a worse risk pool for insurers. Kentucky created its own Marketplace, known as kynect, and adopted Medicaid expansion under the Affordable Care Act, which yielded the largest decline in adult uninsured rate in the United States from 2013 to 2016. The state sponsored an award-winning media campaign, yet after the election of a new governor in 2015, it declined to renew the television advertising contract for kynect and canceled all pending television ads with over a month remaining in the 2016 open enrollment period.ObjectiveThe objective of this study is to examine the stark variation in television advertising across multiple open enrollment periods in Kentucky and use this variation to estimate the dose-response effect of state-sponsored television advertising on consumer engagement with the Marketplace. In addition, we assess to what extent private insurers can potentially help fill the void when governments reduce or eliminate television advertising.MethodsWe obtained television advertising (Kantar Media/Campaign Media Analysis Group) and Marketplace data (Kentucky Health Benefit Exchange) for the period of October 1, 2013, through January 31, 2016, for Kentucky. Advertising data at the spot level were collapsed to state-week counts by sponsor type. Similarly, a state-week series of Marketplace engagement and enrollment measures were derived from state reports to Centers for Medicare and Medicaid Services. We used linear regression models to estimate associations between health insurance television advertising volume and measures of information-seeking (calls to call center; page views, visits, and unique visitors to the website) and enrollment (Web-based and total applications, Marketplace enrollment).ResultsWe found significant dose-response effects of weekly state-sponsored television advertising volume during open enrollment on information-seeking behavior (marginal effects of an additional ad airing per week for website page views: 7973, visits: 390, and unique visitors: 388) and enrollment activity (applications, Web-based: 61 and total: 56).ConclusionsState-sponsored television advertising was associated with nearly 40% of unique visitors and Web-based applications. Insurance company television advertising was not a significant driver of engagement, an important consideration if cuts to government-sponsored advertising persist.

Risk equalization in competitive health insurance markets: Identifying healthy individuals on the basis of multiple‐year low spending

ObjectiveTo study the extent to which risk equalization (RE) in competitive health insurance markets can be improved by including an indicator for being healthy.Study Setting/Data SourcesThis study is conducted in the context of the Dutch individual health insurance market. Administrative data on spending and risk characteristics (2011‐2014) for the entire population (N = 16.6 m) as well as health survey data from a large sample (N = 387 k) are used.Study DesignThe indicator for being healthy is low spending in three consecutive prior years. “Low spending” is defined in three ways: belonging to the bottom 60%, 70%, or 80% of the annual spending distribution. Versions of the Dutch RE model 2017 with and without the indicator are compared on individual‐level payment fit and, using the survey data, group‐level payment fit.Principal FindingsAll three alternative models outperform the Dutch RE model 2017. However, significant unpriced risk heterogeneity remains. Compared with the 60% threshold, the 80% threshold comes with a larger improvement in fit but identifies a less selective group.ConclusionsThe performance of the RE model can be improved by adding an indicator for being healthy based on multiple‐year low spending. However, risk‐selection potential remains, warranting high priority to further improvement of RE.

A series of unfortunate events: implications of Republican efforts to repeal and replace the Affordable Care Act For older adults

ABSTRACTThis paper discusses Republican efforts to repeal the 2010 Patient Protection and Affordable Care Act (ACA) over President Trump’s first year in office (2017) and their impact on near-elderly Americans (50–64 years old). We describe how the ACA’s provisions for strengthening health care coverage were particularly advantageous for near-elderly Americans: The law shored up employer-sponsored health care, expanded Medicaid, and—most important—created conditions for a strong individual health insurance market. We then describe Republican efforts to undermine the ACA in the years immediately following its passage, followed by detailed discussion of Republican proposals to repeal and replace the ACA during 2017. We conclude by discussing factors informing the fate of Republican legislation in this area, the potential consequences of the legislation that ultimately passed, and the prospects for future attempts to repeal and replace the ACA through the legislative process.

Can universal access be achieved in a voluntary private health insurance market? Dutch private insurers caught between competing logics.

For almost a century, the Netherlands was marked by a large market for voluntary private health insurance alongside state-regulated social health insurance. Throughout this period, private health insurers tried to safeguard their position within an expanding welfare state. From an institutional logics perspective, we analyze how private health insurers tried to reconcile the tension between a competitive insurance market pressuring for selective underwriting and actuarially fair premiums (the insurance logic), and an upcoming welfare state pressuring for universal access and socially fair premiums (the welfare state logic). Based on primary sources and the extant historiography, we distinguish six periods in which the balance between both logics changed significantly. We identify various strategies employed by private insurers to reconcile the competing logics. Some of these were temporarily successful, but required measures that were incompatible with the idea of free entrepreneurship and consumer choice. We conclude that universal access can only be achieved in a competitive individual private health insurance market if this market is effectively regulated and mandatory cross-subsidies are effectively enforced. The Dutch case demonstrates that achieving universal access in a competitive private health insurance market is institutionally complex and requires broad political and societal support.

Individual Health Insurance Market with an Entrant – The ACA Health Insurance Exchange Observations

Abstract In this paper, a general framework is built up to model the dynamic of consumer health plan choice and individual health insurance market competition. A primary goal is to identify driving forces to individual health insurance equilibrium market coverage and premium. In the baseline model, we introduce plan quality information search cost as an additional determinant to consumer’s plan choice. Health insurers compete under the Hotelling’s game theory framework. Equilibrium solutions of the baseline model highlight the importance of budget limit and information search cost to health plan enrollment. The more important objective is to examine the impact of market entrants on equilibrium insurance market coverage and plan prices. In the model with market entry, we add an additional dimension to the baseline model. Equilibrium solutions and numerical studies show positive impact of higher insurance market coverage and lower health plan prices. The Affordable Care Act (ACA) brought multiple unprecedented changes to the health insurance market and provided opportunities to study market dynamics and driving forces. The ACA health insurance exchange market experience shows consistency with our model findings even at the early stage of implementation. More importantly, market observations suggest that entry barriers of claim costs and information search cost are high for entrants.

Individual market underwriting profitability in health insurance

We analyze the underwriting performance of insurers operating in the individual health insurance market from 2010-2017. Our sample consists of both life and health insurance companies. First, we offer descriptive sample statistics of key financial performance measures in this market. Then, we study the difference in performance pre- and post-2014, which represents the year that state online marketplace exchanges were implemented as part of significant health care reform, namely the federal Affordable Care Act (ACA). Our analysis allows us to test whether health care reform affected insurers operating in this market and in what ways. Our results suggest that underwriting profitability was worse in the post-ACA period: Generally, loss ratios and losses per enrollee were significantly higher in the post-reform time period. On the other hand, insurer administrative expenses were significantly lower post-2014. Furthermore, we show that these effects are not uniform across all insurers in the market.