Nongroup Market Research Articles

How does health spending among demographic groups compare to Affordable Care Act premium regulations?

AbstractThe Affordable Care Act (ACA) substantially altered regulations in the nongroup and small group health insurance markets and those markets continue to receive significant policy attention. To understand how those markets have functioned in recent years and how they would be impacted by policy changes, we estimated enrollment and spending by age and sex using claims data covering enrollment in ACA risk‐adjusted plans in 2017–2019 and compared spending to a federal default age‐rating curve for premiums. Our results suggest that women aged 55–64 helped stabilize the nongroup market through high enrollment and relatively low spending. Men enrolled in the marketplace also subsidized other nongroup enrollees but to a lesser extent than expected. In fact, men aged25–50 enrolled in nongroup plans spent 18% more than their counterparts enrolled through a small employer. These unique spending patterns have interesting policy implications, including that lowering the Medicare eligibility age would likely increase premiums in the nongroup market.

“Pick a Plan and Roll the Dice”: A qualitative study of consumer experiences selecting a health plan in the non-group market

BackgroundFor consumers without access to employer-sponsored or public insurance, health plan choices in the non-group (individual) insurance market that do not meet consumer needs have the potential for negative downstream implications for health and financial well-being. ObjectiveThis qualitative interview study sought to understand consumers’ experiences and challenges with choosing a non-group health plan, among those who later had negative experiences with the plan they chose. MethodsWe conducted semi-structured telephone interviews with a purposive sample of 36 participants from a large regional health insurance carrier in three states who enrolled in non-group plans in 2017 (21 in Affordable Care Act (ACA) Marketplace plans and 15 enrolled off-Marketplace). Participants were included if they reported negative experiences using their plan after enrollment, such as higher-than-expected medical costs. Interviews explored challenges choosing a plan; information needed for choosing; usefulness of available tools; and preferred format for interventions to improve plan choice experiences. We analyzed interview transcripts using thematic content analysis. ResultsStudy participants reported experiencing substantial challenges to choosing an insurance plan. Key barriers included understanding insurance terms, finding relevant information, and making comparisons across plans. Participants valued the ability to make comparisons across carriers when using the Marketplace websites but were less satisfied with customer service. Suggestions for improvement included greater standardization of plans and language and availability of customized one-on-one assistance. ConclusionFindings from this study suggest that health plan selection in the non-group market presents challenges to consumers that may be addressed through enrollment assistance and improved presentation of information. Personalized assistance to find and choose coverage may lead to plan choices that better meet consumer needs and increase confidence choosing a plan in subsequent enrollment periods.

Effect of Eased Restrictions for Aca-Exempt Short-Term Health Plans on Marketplace Premiums and Uninsured Rate: A Difference in Differences Analysis.

The Affordable Care Act (ACA) established broad standards for private health insurance in the United States including requiring minimum essential benefits and prohibiting medical underwriting, but the law also permitted some exceptions. This paper examines one type of exempt plan option, Short-Term, Limited Duration Insurance (STLDI) that is not required to fully meet ACA benefit and underwriting standards. Federal rules governing STLDI plans have changed over time, with more permissive rules in the Trump administration allowing individuals to remain covered for longer durations of time relative to the original Obama regulations. Within applicable federal guidelines, states have also varied STLDI rules. Using publicly available data measuring state-level variations in STLDI regulations, ACA benchmark premiums, uninsured rates, and population characteristics for 2014 to 2021, we estimate difference-in-differences models to examine if more permissible STLDI policies are associated with higher premiums in the fully regulated non-group market and, also, lower uninsured rates. We find that longer duration, more permissible STLDI is associated with higher benchmark premiums in ACA exchanges and no difference in state-level uninsured rates. Trump administration regulations permitting longer duration STLDI plans to make available more affordable ACA-exempt health insurance were associated with higher premium costs in the ACA-regulated non-group market but we did not observe measurable impact on state uninsured rates. While longer-duration STLDI plans may result in lower costs for some, they have negative consequences for others requiring comprehensive coverage with no discernible benefit in overall coverage rates. Understanding these tradeoffs can help guide future policies regarding exceptions to ACA plan requirements.

How price and quantity factors drive spending in nongroup and employer health plans.

To describe how spending in private, nongroup health insurance plans compared to spending in employer plans and to attribute those spending differences to components related to provider prices and quantity of care. The 2016 commercial claims and enrollment data of three large, national insurers from the Health Care Cost Institute. We compared per member per month spending across three employer and three nongroup market segments, including on-exchange, off-exchange, and short-term plans, to average commercial spending. We constructed price indices in each market segment and then decomposed spending differences into those attributable to differences in prices, health risk, plan generosity, and other factors. We selected all medical claims for enrollees in commercial plans. We excluded enrollees with Medicare Advantage coverage or those for whom the majority of claims were covered by a secondary payer. Provider prices were 4.1% lower in on-exchange plans (p < 0.001) and 1.4% lower in off-exchange plans (p < 0.001), compared to average prices in the same geographic area. In contrast, prices in employer plans were within roughly a percentage point of those averages. Differences in average spending were much larger than price differences. Off-exchange enrollees spent 20% less than the sample average (p < 0.001), whereas on-exchange enrollees spent 12% more (p < 0.001). Those differences were driven largely by variation in health risk, with variation in prices, plan generosity, and other factors contributing smaller amounts. Our results indicate that provider prices in nongroup plans are much closer to the prices paid by employer plans than to the substantially lower prices paid by public payers. In addition, health risk was the largest contributor to differences in spending. Lowering provider prices and attracting healthier enrollees in nongroup plans may be crucial for lowering premiums.

Marketplace Health Insurance Ratings: Most Potential Enrollees Have Access To Plans Of Medium Or High Quality.

The Affordable Care Act (ACA) Marketplace plays a critical role in providing affordable health insurance for the nongroup market, yet the accessibility of plans from insurers with high quality ratings has not been investigated. Our analysis of recently released insurer quality star ratings for plan year 2020 found substantial variation in access to high rated plans in the federally facilitated ACA Marketplace. In most participating counties (1,390 of 2,265, or 61.4percent), the highest-rated ACA Marketplace insurer had a three-star rating. Fewer than one-third of counties (703, or 31.0percent) had access to four- or five-star-rated insurers. Fewer than 10percent (172, or 7.6percent) had access to only one- or two-star-rated insurers. In plan-based analyses, each one-point increase in star rating was associated with a $28 increase in the average monthly plan premium. Counties with the highest proportion of residents obtaining individual coverage through the ACA Marketplace and counties with more insurers were the most likely to have access to plans from high-rated insurers. We found no systematic racial or ethnic disparities in access to plans from high-rated insurers. Policy makers should continue to monitor the quality of available health plans.

The Relationship Between Unemployment and Health Insurance Coverage: Before and After the Affordable Care Act's Coverage Expansions.

The objective of this study was to determine whether the Affordable Care Act's (ACA) major coverage expansions mitigated the impact of unemployment on health insurance coverage status. A 2011-2019 versions of the American Community Survey developed by the University of Minnesota Integrated Public Use Microdata Series program. We use difference-in-difference-in-differences (ie, triple difference) regressions to compare changes in the short-run impacts of local unemployment rates before and after the ACA. Before the ACA, rises in local unemployment were associated with uninsurance due to losses in private coverage (ie, both nongroup and employer sponsored).Following the ACA's full implementation, the link between employment and coverage was attenuated by access to publicly subsidized qualified health plans on the ACA's nongroup market, and enhanced access to Medicaid in states that expanded. Our findings suggest protections from unemployment-linked uninsured spells are largest in states that expanded Medicaid. Expanded access to coverage under the ACA could mitigate the adverse effects on insurance status and access to care historically linked to job loss. However, should the ACA be repealed, many households stand to lose their ability to turn to Medicaid or subsidized nongroup coverage as safety-net resources to offset the burdens of job loss.

Why do narrow network plans cost less?

Narrow network health insurance plans have been shown to have lower premiums and lower costs to insurers. This paper decomposes and quantifies the magnitudes for various mechanisms by which networks may reduce premiums and costs. Using data on the Colorado non-group market, we examine three mechanisms through which a narrow network might achieve lower costs: (1) enroll a population with lower utilization, (2) negotiate lower prices, or (3) steer patients away from high-cost hospitals. We find that all three mechanisms play a role. Narrow plans are partly able to achieve lower costs because they both steer patients to lower cost hospitals and, for a given hospital, negotiate lower prices than broad plans. The lower negotiated prices mechanism accounts for 15% of the cost savings to narrow network plans, and the steering away from higher cost hospitals accounts for about 18%. Both of these mechanisms can be ways to efficiently lower costs. The remaining 67% of the cost savings is due to lower utilization of narrow network plan enrollees. These findings are important for policymakers considering how to balance containing healthcare costs with concern for the appropriate regulation of narrow network plans.

Understanding Consumer Experiences and Insurance Outcomes Following Plan Disenrollment in the Nongroup Insurance Market.

Disenrollment from health plans purchased on Affordable Care Act (ACA) Marketplaces is frequent; little is known whether disenrollment from off-Marketplace plans is as common or about the experiences and consequences of disenrollment. Using longitudinal administrative data on 2017-2018 nongroup plan enrollment linked with survey data, we analyze plan disenrollment in one regional insurance carrier servicing three states. Overall, 71% of enrollees disenrolled from their 2017 plan. Disenrollment was associated with purchasing through an ACA Marketplace, the carrier making significant changes to an enrollee's plan benefit design, being healthier, being younger, and paying a higher premium for their 2017 plan in 2018. Experiencing financial burden or poor access to preferred providers was not associated with disenrollment. Most disenrollees (93.2%) enrolled in other coverage, often at a lower premium, but lacked confidence that they could afford needed care. These results can inform policy to support enrollees through coverage transitions and foster stability in the nongroup market.

The Affordable Care Act's Coverage Impacts in the Trump Era.

The 2016 US presidential election created uncertainty about the future of the Affordable Care Act (ACA) and led to postponed implementation of certain provisions, reduced funding for outreach, and the removal of the individual mandate tax penalty. In this article, we estimate how the causal impact of the ACA on insurance coverage changed during 2017 through 2019, the first 3 years of the Trump administration, compared to 2016. Data come from the 2011–2019 waves of the American Community Survey (ACS), with the sample restricted to non-elderly adults. Our model leverages variation in treatment intensity from state Medicaid expansion decisions and pre-ACA uninsured rates. We find that the coverage gains from the components of the law that took effect nationally—such as the individual mandate and regulations and subsidies in the private non-group market—fell from 5 percentage points in 2016 to 3.6 percentage points in 2019. In contrast, the coverage gains from the Medicaid expansion increased in 2017 (7.0 percentage points) before returning to the 2016 level of coverage gains in 2019 (5.9 percentage points). The net effect of the ACA in expansion states is a combination of these trends, with coverage gains falling from 10.8 percentage points in 2016 to 9.6 percentage points in 2019.

Market Power in the Presence of Adverse Selection

Market power can reduce the symptoms of adverse selection. To see the relationship, consider the incentive for a firm to offer a product that appeals to low-risk consumers and leads high-risk consumers to purchase insurance elsewhere. This incentive problem can be addressed through regulation but is also absent in a monopoly. This paper develops a model of welfare to explicitly characterize the substitutability between adverse selection regulation and market power. Market concentration has welfare benefits by reducing inefficient sorting of consumers among available plan options, a symptom of adverse selection. However, since market concentration also carries the welfare cost of higher markups, the magnitude and net direction of the effects are an empirical question. The model is estimated for the non-group market using novel choice data from a private online broker and a risk prediction model to relate preferences to marginal cost. The analysis focuses on two policies that target different dimensions of adverse selection: risk adjustment and the individual mandate. A simulation of a proposed merger of two insurance firms shows that, in the absence of a risk adjustment policy, the merger improves consumer welfare in markets that are not already highly concentrated. While the risk adjustment policy does not optimally price the sorting externality, it is successful in reducing the welfare cost of inefficient sorting and also eliminating the potential benefit to consumers from additional market power. The individual mandate is successful in increasing the insurance rate and lowering prices in the least concentrated markets, but leads to higher prices in the most concentrated markets. These results suggest that selection regulation is advantageous in competitive insurance markets, and less necessary and potentially harmful in very concentrated markets.

The individual welfare effects of the Affordable Care Act for previously uninsured adults.

The Affordable Care Act (ACA) improved welfare by expanding, subsidizing, and standardizing healthcare coverage. At the same time, the law also penalizes the remaining uninsured and establishes a benchmark private policy that charges premiums and cost-sharing expenses in the non-group market. This paper introduces a conceptual and empirical framework for evaluating the net effects of ACA coverage expansions for the individual welfare of previously uninsured adults. Using restricted-access data from the 2010-2012 Medical Expenditure Panel Survey, I evaluate the short-term welfare effect as a function of health and non-medical consumption. I simulate post-ACA insurance status then evaluate the change in expected medical consumption and the utility of consumption by estimating parameter values for a generalized gamma distribution of the ex-ante spread of healthcare and medical spending for each person. The ACA generates a modest net improvement in individual welfare on average (+ $91). While low-income individuals realize gains (+ $539), all other income-groups realize increasingly large losses. The uninsured majority (65%) realize average losses (- $158). Medicaid beneficiaries realize substantial gains (+ $1309). While in most specifications, exchange enrollees realize average gains (+ $146), just under a quarter (24%) realizes any improvement. The chronically-ill realize substantial gains (+ $1065). The non-chronically-ill majority (71%) realize average losses (- $312). Despite weakly lower risk premiums (- $28), medical spending increases in catastrophic scenarios on average. The ACA improves the welfare of some, especially the low-income and chronically-ill. Medicaid generates unequivocal gains for beneficiaries. Most previously uninsured adults remain uninsured, some of whom pay a penalty. The subsidized cost of ACA private insurance outweighs its benefits for most exchange enrollees.

The Affordable Care Act’s Marketplaces Expanded Insurance Coverage For Adults With Chronic Health Conditions

The Affordable Care Act (ACA) made private nongroup health insurance more accessible to nonelderly adults with chronic conditions, with enrollment growth occurring through the federal and state-based Marketplaces. During the July through December reference period in 2014-15, 45percent of Marketplace enrollees ages18-64 were treated for chronic conditions, compared with 35percent of non-Marketplace nongroup enrollees and 38percent of adults with employer-sponsored insurance. Marketplace enrollees also had higher service use than other privately insured adults did, which likely contributed to rising premiums in the nongroup market. As repeal of the ACA individual mandate takes effect in 2019, protecting coverage gains for adults with chronic conditions while stabilizing nongroup premiums may depend on state-level efforts to spread the risk of Marketplace enrollees' health care costs across a balanced insurance pool.

Medical Financial Burden Declined For Consumers In The Nongroup Market.

The share of consumers in the nongroup health insurance market who spent more than 10percent of family income on medical expenses declined by 6.7 percentage points after Affordable Care Act implementation (2013-15), and after adjustments for other factors. Average family medical expenses declined by $811 for nongroup consumers.

The impact of the Affordable Care Act on self-employment.

This paper estimates the impact of the implementation of the Affordable Care Act (ACA) in 2014 on the decision to be self-employed. Using data from the Current Population Survey, we employ two identification strategies. Utilizing prereform variation in state nongroup health insurance market regulations, we find that the ACA did not increase self-employment overall in states that lacked similar provisions in their nongroup markets prior to 2014. In specifications that utilize variation across individuals in characteristics that could make it harder for them to purchase insurance if they left their current employer, we also do not find that the ACA differentially increased self-employment. However, in states that lacked the ACA nongroup market provisions, we do find a statistically significant increase in the second year of implementation (when individuals had more time to adjust behavior and the exchanges functioned properly) among individuals eligible for insurance subsidies, suggesting that a combination of time to adjust, low uncertainty and low insurance costs may be necessary for nongroup health insurance reforms to impact self-employment.

Plan Selection in the Non-Group Market in the First Year of the Health Insurance Marketplace.

BACKGROUND The Affordable Care Act (ACA)-created Marketplaces reduced barriers to entry in the non-group health insurance market. Although tax credits were available to individuals who enrolled in qualified health plans (QHPs) beginning in 2014, many individuals chose not to switch plans. We examined characteristics associated with switching from a non-ACA compliant plan to a QHP in 2014 and, conditional on switching, the characteristics associated with selection of a specific plan level.METHODS Using claims data from a large commercial insurer, we examined characteristics associated with switching to a QHP in 2014. For those who did switch, we used a multinomial logit model to estimate odds of selecting different metal levels-representing varying degrees of coverage-for a group of the highest and lowest risk individuals.RESULTS We found individuals most likely to benefit from the premium and benefit requirements on QHPs were more likely to switch to QHPs. Individuals at high-risk for high health care expenditures who had advance premium tax credits (APTCs) had lower odds of choosing a less generous plan compared to individuals without APTCs (odds of bronze plan over silver: 0.40, CI: 0.30 - 0.55), while individuals at low-risk of being high cost with APTCs were more likely to select a plan with a lower premium (odds bronze plan over silver: 1.35, CI: 1.09 - 1.66).LIMITATIONS This study was conducted with data from 1 health plan, limiting its national generalizability; however, this study is a good representation of activity within the state.CONCLUSIONS APTCs are important for ensuring that less healthy individuals are able to afford adequate levels of coverage.

Adverse Selection in ACA Exchange Markets: Evidence from Colorado

This study tests for adverse selection in the established Affordable Care Act (ACA) health insurance exchanges established in 2014, and quantifies the consequences for consumer welfare and market efficiency. Using a new statewide dataset of medical claims from Colorado, I use plausibly exogenous premium variation generated by geographic discontinuities to test for adverse selection. In this context, a positive relationship between premiums and medical spending of the insured population indicates adverse selection, as the lowest cost individuals are the first to drop out of the market in response to rising premiums. I find evidence of adverse selection in the non-group market, where a 1% increase in premiums leads to a 0.8% increase in the average annual medical expenditures of the insured population. I then estimate insurance demand using the same geographic premium variation. The demand and cost estimates can be combined in a framework to calculate the welfare loss due to selection, as well as an evaluation of policy interventions. My estimates indicate that providing additional premium subsidies would enhance welfare in this market, and moreover, due to heterogeneity across age groups in both demand and costs, I estimate that age-targeted premium subsidies would be a more cost-effective use of public funds to enhance welfare. These results offer the first quasi-experimental evidence of adverse selection in the new ACA Exchange markets, and conclusions from the policy evaluations have implications for the future effectiveness of this cornerstone of the ACA.

The Impact of the ACA on Premiums: Evidence from the Self-Employed.

This article examines the impact of the Affordable Care Act on premiums by studying a segment of the nongroup market, the self-employed. Because self-employed health insurance premiums are deductible, tax data contain comprehensive individual-level information on the premiums paid by this group prior to the establishment of health insurance exchanges. We compare these prior premiums to reference silver premiums available on the exchanges and find that exchange premiums are 4.2 percent higher on average among the entire sample but 42.3 percent lower on average after taxes and subsidies. We also examine which type of exchange coverage would cost less than the individual's prior health insurance premiums and find that almost 60 percent of families could purchase bronze plans for less than their prior premiums, though only about a quarter could purchase platinum plans. After taxes and subsidies, the fractions increase to over 85 percent for bronze plans and over half for platinum plans.

Can Private Insurers Fail to Cream-Skim the Public Option? Evidence from the Individual Mandate in Germany.

Conventional wisdom suggests that if private health insurance plans compete alongside a public option, they may endanger the latter's financial stability by cream-skimming good risks. Documenting cream-skimming in dual insurance systems empirically is challenging, since selection into private insurance is non-random and being privately insured may change individual's healthcare consumption. In this paper, I use a regression discontinuity design based on exogenous variation in the propensity of choosing private health insurance to address this challenge. The empirical setting is the health insurance system in Germany, where there exists an unsubsidized non-group for-profit private health insurance market in parallel to a statutory alternative. Federal regulation mandates individuals with income below an annually set threshold to enroll into the statutory system, which is a policy that I exploit for my empirical strategy. Surprisingly, the data does not corroborate the conventional wisdom about selection on the extensive margin, as I do not find compelling support for cream-skimming by private insurers. Using a discrete choice model of demand for private insurance, I explore heterogeneous tastes for convenience in healthcare consumption and long-term contract design of private insurers as potential explanations for this result.

Insurance cancellations in context: stability of coverage in the nongroup market prior to health reform.

Recent cancellations of nongroup health insurance plans generated much policy debate and raised concerns that the Affordable Care Act (ACA) may increase the number of uninsured Americans in the short term. This article provides evidence on the stability of nongroup coverage using US census data for the period 2008-11, before ACA provisions took effect. The principal findings are threefold. First, this market was characterized by high turnover: Only 42 percent of people with nongroup coverage at the outset of the study period retained that coverage after twelve months. Second, 80 percent of people experiencing coverage changes acquired other insurance within a year, most commonly from an employer. Third, turnover varied across groups, with stable coverage more common for whites and self-employed people than for other groups. Turnover was particularly high among adults ages 19-35, with only 21 percent of young adults retaining continuous nongroup coverage for two years. Given estimates from 2012 that 10.8 million people were covered in this market, these results suggest that 6.2 million people leave nongroup coverage annually. This suggests that the nongroup market was characterized by frequent disruptions in coverage before the ACA and that the effects of the recent cancellations are not necessarily out of the norm. These results can serve as a useful pre-ACA baseline with which to evaluate the law's long-term impact on the stability of nongroup coverage.

Are the Healthy Behaviors of US High-Deductible Health Plan Enrollees Driven by People Who Chose These Plans? Smoking as a Case Study

PurposeTo determine whether negative associations between enrollment in a high-deductible health plan (HDHP) and one exemplar unhealthy behavior – daily smoking – are found only among people who chose these plans.DesignCross-sectional analysis of nationally-representative data.SettingUnited States from 2007 to 2008.Subjects6,941 privately insured non-elderly adult participants in the 2007 Health Tracking Household Survey.MeasuresSelf-reported smoking status.AnalysisWe classified subjects as HDHP or traditional health plan enrollees with employer-sponsored insurance (ESI) and no choice of plans, ESI with a choice of plans, or coverage through the non-group market. We used multivariate logistic regression to measure associations between HDHP enrollment and daily smoking within each of the 3 coverage source groups while controlling for potential confounders.ResultsHDHP enrollment was associated with lower odds of smoking among individuals with ESI and a choice of plans (AOR 0.55, 95% CI 0.33–0.90) and those with non-group coverage (AOR 0.64, 95% CI 0.34–1.22), though the latter association was not statistically significant. HDHP enrollment was not associated with lower odds of smoking among individuals with ESI and no choice of plans (AOR 1.04, 95% CI 0.69–1.56).ConclusionsHDHP enrollment is associated with lower odds of smoking only among individuals who chose to enroll in an HDHP. Lower rates of unhealthy behaviors among HDHP enrollees may be a reflection of individuals who choose these plans.