Recent Patient Protection and Affordable Care Act policy changes concerning provider networks, the extension of old health plans and the employer mandate will likely have a negative impact on health insurers selling policies through the exchanges, according to Moody's Investors Service.
Last week, CMS issued guidance for insurers looking to sell health plans through the federally facilitated marketplace or federally run small business health options program in 2015. The guidance includes tougher certification requirements: CMS intends to propose that qualified health plan provider networks include at least 30 percent of available essential community providers, up from 20 percent in 2014. Essential community providers are those that serve predominantly low-income and medically underserved individuals, according to CMS.
According to Moody's, "forcing insurers to expand their networks will result in higher premiums that will further discourage enrollment by the younger and healthier population; if the trend were to continue, these products would eventually become unsustainable."
The Obama administration is also considering allowing people to remain enrolled in non-PPACA compliant plans until 2016. Late last year, President Obama initially decided to let health insurers continue offering plans that don't meet the reform law's requirements through the end of this year. Originally, non-grandfathered policies — plans that went into effect or underwent certain changes after the PPACA became law in March 2010 — had to meet new coverage requirements in 2014, and many insurers sent out cancellation notices to people in non-grandfathered plans that weren't compliant with the new criteria.
In December, Moody's issued a report stating the extension of noncompliant plans could lead younger, healthier people to stay away from the exchanges in 2014, resulting in a negative effect on the risk profile of the exchange health risk-pool. According to the most recent Moody's report, extending those plans for another two years will "exacerbate the issue and will likely result in higher premiums for exchange policies with an insured population that will be less healthy and less profitable for insurers."
Finally, the Obama administration's decision last week to delay the PPACA's employer mandate by another year for certain businesses will also affect payers. Under the PPACA, businesses and companies with 50 or more employees are mandated to offer health insurance to those employees or pay a penalty. The mandate will now take effect January 2016 instead of January 2015 for businesses with 50 to 99 employees.
According to Moody's, employers that are now exempt from the mandate for another year could force insurers to "resurrect" non-PPACA compliant small group policies they had planned to discontinue, making what was already going to be a challenging selling season in the small group market more difficult.
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