Contrary to what many Republicans claim, the Affordable Care Act is not in a death spiral, according to the Kaiser Foundation report, "Individual Insurance Market Performance in Early 2017."
While Kaiser's earlier analysis of premium and claims data from 2011 to 2016 found insurers' financial performance indeed worsened in 2014 and 2015 with the opening of the exchange markets, their performance showed signs of improving in 2016. The most recent analysis of insurers' first-quarter financial data is even more positive.
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The latest data offers "more evidence that the individual market has been stabilizing and insurers are regaining profitability," the authors write.
Insurers' loss ratios — the share of health premiums paid out as claims – averaged 75 percent in the first quarter, according to the report. While the year-end average will likely be higher following recent trends, "this is nevertheless a sign that individual market insurers on average are on a path toward regaining profitability in 2017."
Looking at insurers' financial performance as measured by gross margins — the average amount by which premium income exceeds claims costs per enrollee in a given month — "improved dramatically" in the first quarter, increasing to $99 per enrollee, from a recent first quarter low of $36 in 2015. Even though year-end data will likely be higher, "these data suggest that insurers in this market are on track to reach pre-ACA individual market performance levels."
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Simultaneously, there is slow growth in claims for medical expenses, according to the report. On average, premiums per enrollee grew 20 percent from first quarter 2016 to first quarter 2017, while per person claims grew only 5 percent. On average, the number of days individual market enrollees spent in a hospital in first quarter of 2017 is similar to first quarter inpatient days in the previous two years.
"Insurer financial results show no sign of a market collapse. Although individual market enrollees appear on average to be sicker than the market pre-ACA, data on hospitalizations in this market suggest that the risk pool is stable on average and not getting progressively sicker as of early 2017."
Still, the authors concede some areas of the country "are more fragile," and may be at risk of having no insurer on exchange, though new entrants or expanding insurers have moved in to cover most areas previously thought to be at risk of being bare. However, the authors blame this on "policy uncertainty," which has the potential to destabilize the individual market generally.
Related: ACA not failing as GOP claims
"Mixed signals from the administration and Congress as to whether cost sharing subsidy payments will continue or whether the individual mandate will be enforced have led to some insurers to leave the market or request larger premium increases than they would otherwise," they write.
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