Analysis: The individual market is looking more like the group market
By the end of 2017, the average premium of an individual plan was nearly identical to that of a small group or large group plan.
After the initial disruption caused by the Affordable Care Act, the individual insurance market appears to have stabilized and increasingly resembles the group market, finds an analysis by the Commonwealth Fund.
Historically, individual plans have been cheaper due to the fact that insurers could deny coverage to those with expensive medical conditions. When the ACA prohibited that practice, premiums and per-member spending in the individual market predictably shot up.
Related: More insurers returning to ACA marketplaces
Average individual premiums increased from $242 to $347 between 2013 and 2014, the first year of the ACA’s implementation. During that time, average medical claims in the individual market rose from $210 to $296.
In the three subsequent years, the cost of individual plans continued to rise, but not nearly as dramatically. By the end of 2017, the average premium of an individual plan was nearly identical to that of a small group or large group plan.
- Large group: $422
- Small group: $440
- Individual: $420
Medical claims in the individual market are also about the same as in group plans.
- Large group: $375
- Small group: $367
- Individual: $360
While some insurers gave up on the ACA marketplace due to higher-than-expected losses in the first couple years, others that have stuck around have been able to generate profits, the analysis finds, due to price increases.
“In fact, in terms of profitability, the individual market performed better than it did before the ACA,” write Mark A. Hall and Michael J. Cue. “This more sustainable pricing has resulted in premiums that are very close to those for small- and large-group policies.”
The study authors urge caution in interpreting the national analysis. In some markets, the picture is not nearly as pretty and the analysis takes into account cheaper plans that are not ACA-compliant.
“Nevertheless, the view from this vantage point depicts much more market convergence than divergence, at least through 2017,” they conclude. “It remains to be seen whether this relative stability will persist following increased availability of plans that are not compliant with the ACA in the individual and small-group markets and judicial challenges to the ACA’s constitutionality.”
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