The individual market in 2019

The individual mandate is gone in 2019. The short duration plan regulations dropped yesterday. Those plans will allow for underwriting, medical exclusions and plans that offer don’t offer the full array of required benefits. What will the 2019 individual market look like?

Right now for someone who has to either buy their insurance on the individual market or go uninsured, there are a couple of broad pathways. They can buy a subsidized or unsubsidized ACA plan, they can participate in a Health Sharing Ministry, get on a three month short term plan or go uninsured.

Next year, those options change significantly. The individual mandate repeal and the proliferation of 364 day underwritten plans will pull a lot of good risk out of the current Qualified Health Plan (QHP) universe. This has major distributional consequences.

People who qualify for significant Advanced Premium Tax Credits (APTC) and CSR assistance will most likely stay in the ACA market. There will be some leakage of healthier individuals who can pass medical underwriting and who receive some but not large APTC credits move to the non-regulated individual market. Insurers will have strong incentives to aggressively strategize their product offerings to maximize Silver Gaps and potential CSR based Silver-Loads to lower the absolute post-subsidy prices; this will minimize the loss of healthy subsidized buyers to lightly regulated plans.

Healthy people and women who do not intend to get pregnant next year and who make too much for APTC or otherwise don’t qualify for it can buy much cheaper coverage. Some of the coverage is good coverage, some is appropriate for the hit by a meteor/congrats you have cancer situations and some is junk. These individuals have had this choice to some degree already today as there are the Health Sharing Ministries but the options will be much broader and more aggressively sold. Brokers will push these plans as the brokers are highly likely to get good commissions on these products.

So far we’ve talked about either subsidized individuals or healthy individuals. They’ll be okay or better off. The big problem are people who aren’t healthy and who make too much to qualify for the ACA subsidy pool. They are in trouble.

The average ACA premium will increase because the lack of an individual mandate will draw out some of the healthier and cheaper individuals from paying premiums. The average ACA premium will also increase as the underwritten plans can offer cheaper/better deals to the healthiest/youngest people who would still want to be insured even without the mandate. For subsidized buyers, they don’t feel the incremental rate increases. Non-subsidized buyers are not protected.

For non-subsidy eligible people with moderate risk, they might be able to get an underwritten plan at an up-rated premium that may be cheaper than an ACA plan without any subsidies. But for people with low risk but high guaranteed expenses such as individuals with metastatic cancers, hemophilia and cystic fibrosis, no underwritten plan will touch them with a thirty foot pole. Their application would be burned on the spot and the ashes placed on a rocket that will crash into the sun.

These individuals are being left out of what will be effectively a well subsidized and well funded high risk ACA pool and they are underwritten out of the market for healthy, non-subsidized individuals. These are the people who are at the most long run risk as the off-Exchange market segment will get proportionally far sicker and thus the entire ACA risk pool will get sicker, holding everything else constant, and thus more expensive. We will see aggressive financial engineering to get chronically ill individuals into the subsidized income thresholds.

Insurers know how to price sick risk pools as long as they know to expect sick risk pools. Single insurer regions and states are probably more likely to increase as the risk of getting an unexpectedly sick risk pool declines if there is no competitor cherry picking the relatively healthy.

Smart insurers with years of claims data will be able to aggressively self-cherry pick low cost members who are likely to drop coverage and push them into lower premium underwritten plans.

The 2019 individual market will have four parts:

  • The Uninsured
  • The Underwritten
  • The Subsidized
  • The SOL

This is a reprise of a previous post






18 replies
  1. 1
    Sab says:

    Wow. So we still might blow up the ACA. Took us 100 plus years to enact what every other advanced country has already enacted, and now we are going to successfully sabotage it. We are exceptional, just not in a good way.

  2. 2

    @Sab: If subsidies were un-attached from income this could work. That is the key — how are we paying for care for people who have identified high risks. Everything after that is a detail (an important one) that needs to be worked out.

  3. 3
    dr. bloor says:

    David, do the tiers in the UPMC plan you linked to refer to the type of and extent to which services are covered under the plan? What are some of the broad differences between, say Tiers 1, 3 and 6? On the face, they look like pretty good plans, so naturally I am skeptical.

  4. 4
    WereBear says:

    I keep saying the Republicans have become “The Party of let’s render down the 99% for their cash value” and they will stop just short of selling our organs on the black market.

  5. 5

    @dr. bloor: No, those are underwriting levels. Tier 1 is no reason to ever suspect utilization, Tier 6 is frequent utilization expected.

  6. 6
    Brachiator says:

    The new tax reform law may also let some people go uninsured. This will affect some people in 2018 as well as 2019.

    The requirement to have health insurance is determined in part by household income. But if your household income is below the filing threshold you are exempt.

    The increase in the standard deduction raises the filing threshold for some individuals and some who may file jointly.

  7. 7
  8. 8
    Sab says:

    Anybody remember that uninsured twenty-something that got bit by the copperhead snake when she walked through a suburban DC parking lot on the way to a walk in the park? She was looking at 50 grand in medical bills. About 15 years ago.

    Everyone needs good insurance.

  9. 9
    MoxieM says:

    Question: is this evil setup uniform across the USA, or are there still individual states (CA, MA, VT??) that will retain some form of “ACA/Romneycare” laws that protect the non-subsidized individual buyer? Or does Federal law supercede any state law?

  10. 10
    NJDave says:

    My wife and I retired early thinking that we’d be able to get affordable insurance through ACA. I only have about two years before Medicare, but have easily-treated hypertension and a couple of other chronic, but mild conditions. This analysis suggests that these next two years will be very expensive.

    Yes I’m quite worried. Is there any reason I shouldn’t be?

  11. 11
    Florida Frog says:

    @NJDave: I’m in the same boat except with osteoporosis instead of hypertension. We were so thrilled to able to retire a few years early and enjoy life/tons of volunteer work. We may have been foolish to trust in the ACA’s permanence.

  12. 12
    dnfree says:

    @NJDave: Your situation sounds concerning to me. People made decisions based on conditions at the time, and it isn’t fair for Congress to change the terms like that. I have to think there are a lot of people in your situation, including ones with much more expensive health conditions. What happened to “repeal and REPLACE” and Trump’s promises about how the new plan would be so much more wonderful? What happened to all the promises for people with pre-existing conditions?

  13. 13
    Brachiator says:

    @dnfree:

    What happened to “repeal and REPLACE” and Trump’s promises about how the new plan would be so much more wonderful?

    The Democrats need to drive this simple point home. Trump and the GOP lied. After years and years of empty promises, their only solution is cheap junk plans that may put people at risk when they really need health care.

  14. 14
    J R in WV says:

    @Sab:

    A couple of summers ago two friends of ours were bitten by copperheads while gardening in separate incidents. One was medicaid-covered (has an unidentified seizure disorder and seems unemployable) and one had employer sponsored insurance (she is a physical therapist assistant).

    Friend with actual insurance got one anti-venom shot (plus tetanus and antibiotics for a trivial fee) that cost $67,000… I saw the bill, yes $67K!!

    Friend on medicaid got tetanus and antibiotics was offered pain killers which he declined as he doesn’t like the buzz he gets from pain killers. No anti-venom, just tylenol. Ouch! No out-of-pocket, tho!!

  15. 15
    MomSense says:

    I’m getting killed with costs this year. I’m so mad.

  16. 16
    J R in WV says:

    @NJDave:

    “My wife and I retired early thinking that we’d be able to get affordable insurance through ACA….. This analysis suggests that these next two years will be very expensive.”

    @Florida Frog:

    “I’m in the same boat …. We may have been foolish to trust in the ACA’s permanence.”

    @dnfree:

    “Your situation sounds concerning to me. People made decisions based on conditions at the time, and it isn’t fair for Congress Republicans to change the terms like that. I have to think there are a lot of people in your situation, including ones with much more expensive health conditions. What happened to “repeal and REPLACE” and Trump’s promises about how the new plan would be so much more wonderful? What happened to all the promises for people with pre-existing conditions?”

    @Brachiator:

    “….Trump and the GOP lied. After years and years of empty promises, their only solution is cheap junk plans that may put people at risk when they really need health care.”

    A lot of comments along the same lines. When we retired I was eligible for employer-supported insurance until I became eligible for Medicare, and Wife was permanently and totally disabled [don’t ask, it took years and a lawyer!!!] and hence eligible for Medicare as of her date of disability, when the federal judge awarded her the disability. Otherwise I would have worked 8 years longer.

    I suspect a huge class-action suit against the Republican party and its elected members who have stabbed their constituents in the back might receive some headlines… Or perhaps just the Republican party and associated “think-tanks” who lied… as the actual politicians who did the stabbing are probably protected by their office, right? Right!

  17. 17
    Brachiator says:

    I noted the following for 2018 and 2019

    The requirement to have health insurance is determined in part by household income. But if your household income is below the filing threshold you are exempt.

    The increase in the standard deduction raises the filing threshold for some individuals and some who may file jointly.

    Also, for 2018, the increased standard deduction may reduce the Individual mandate amount owed based on the “percentage of income” method of calculating the penalty.

  18. 18
    NJDave says:

    @J R in WV: I’m skeptical of anything other than Vote the Bastards Out. I suspect that nothing can be done over the next two years other than stopping the sabotage starting with a more Democratic (and democratic) House in 2019.

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