Insurers selling plans on the Affordable Care Act marketplace are expected to pay consumers $800 million in 2019 as a result of excess premiums, according to a new review of preliminary estimates.
The Kaiser Family Foundation on Tuesday released a report that found uncertainty over the future of the ACA's individual health insurance market in 2018 led to spikes in premiums and some of the best annual performances by insurers.
Overall, the analysis projects insurers are expected to pay up to $1.4 billion in rebates due to excess premium payments across the individual and small- and large-group markets, marking the largest payment to consumers since the law went into effect in 2010.
The previous largest rebate ever paid was in 2011, when insurers returned $399 million to customers and a total of $1.07 billion across individual and small- and large-group markets.
Despite those rebates, last year stood as the best financially for insurers in the individual market since 2011, with monthly average individual market gross margins per member more than doubling from $78 in 2017 to $167 in 2018.
The payments are a result of health insurers failing to spend at least 80% of premium revenues on claims or quality improvements as required by the ACA's medical loss ratio. The average share of health premiums paid out in claims fell from 82% in 2017 to 70% in 2018.
A number of factors led to rising marketplace premiums last year. Payments per enrollee grew 26% to $559 in 2017. However, per person claims grew only 7% to $392 year over year.
A large driver was the uncertainty over the fate of the ACA's individual mandate, which was eventually repealed by Congress in 2017, as was the Trump administration's proposal to expand the availability of short-term, non-ACA insurance plans. But the biggest factor was the Trump administration's move in October 2017 to discontinue government-backed, cost-sharing subsidies.
Study lead author Cynthia Cox, director of the Kaiser Family Foundation's program for the study of health reform and private insurance, said the loss of subsidies likely caused insurers to over-correct.
"Based on how they were performing they likely would have only needed small increases or even to hold premiums mostly flat going into 2018 but instead rates went up by more than 20%," Cox said.
In recent years, there were concerns that increased premiums and lost subsidies would drive younger, healthier consumers out of the marketplace, leaving mostly older, sicker members to drive up healthcare costs. But those fears never really materialized. The average number of days individual market enrollees spent in a hospital fell to the lowest rate since 2014.
Such indicators seem to point to a stabilization of the market that has added more insurers in 2019 after years of exits. With that said, the report projects more than 3 million consumers should receive rebates by Sept. 30.
