Insurers had most profitable year yet on ACA exchanges: 5 things to know

Morgan Haefner - Print  | 

While the early years of the ACA exchanges featured volatile price and offering changes, by 2017, the individual market had begun to stabilize, according to the Kaiser Family Foundation.

Five things to know:

1. Policy changes aside, health insurers would likely have only needed to raise premiums by modest amounts to swing into the black or remain profitable in 2018.

2. However, several changes at the federal level — including elimination of the ACA's individual mandate and cost-sharing reduction payments, and reduction of outreach funds — affected which insurers participated in the market and how much those remaining increased premiums.

3. As a result, insurers ended up raising their benchmark premiums by an average of 34 percent in 2018, according to KFF.

4. The premium raises may have been more than what was necessary in 2018. According to KFF's analysis, insurers are slated to pay a record $800 million in rebates to customers who purchased plans on the individual market. The rebates are required if insurers don't meet the ACA's medical loss ratio threshold, which requires insurers to spend at least 80 percent of premium revenue on healthcare services.

5. KFF determined "individual market insurers saw better financial performance in 2018 than in all the earlier years of the ACA and returned to, or even exceeded, pre-ACA levels of profitability."

For the full analysis, click here.

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