The health insurance sold on the exchanges for the 2024 plan year will come with stricter prior authorization requirements, narrower networks and other attributes companies devised to constrain premium hikes amid growing competition.
Open enrollment begins Wednesday and runs until Jan. 15 in the 32 states that use the federal HealthCare.gov portal. The sign-up period varies for state-run marketplaces.
More than 96% of U.S. residents live in areas served by at least three health insurance exchange carriers, up from 93% this year, according to the Centers for Medicare and Medicaid Services. Premiums for benchmark Silver plans are 4% higher on average for 2024, CMS reported last week, although tax credits will cover the difference for those whose incomes qualify them for subsidies. During open enrollment for this year, 90% of enrollees received premium tax credits, CMS data show.
Escalating competition has created a race to the bottom in terms of benefits, said Sabrina Corlette, a professor at the Georgetown University Center on Health Insurance Reforms.
“The only way you can survive is to really pull back on your network, do really aggressive utilization management like lots and lots of prior authorization and denying lots of claims,” she said. “The pressure is so strong to be that lowest-cost Silver plan. That's where consumers are going.”
Here are five things to watch for during 2024 open enrollment:
CMS enrollment strategy
CMS will prioritize enrolling individuals in subsidized Silver plans. For the first time, the agency will review income data on current Bronze customers to determine if they earn below 250% of the federal poverty level, which is $33,975 for an individual, and qualify for cost-sharing reductions, which are only available for Silver plans. If they meet the income requirements and do not actively select other plans, CMS will enroll them in lower-cost Silver plans from the same carriers with the same provider networks.
“We could expect to see several hundreds of thousands of people moved between metal tiers,” said David Anderson, a doctoral student at the Duke University Margolis Center for Health Policy. “It's going to be interesting both in regards to the composition of insurers' risk pools and people’s lived experience.”
For-profit vs. nonprofit
Every large, for-profit health insurance company except Cigna expanded its geographic footprint on the marketplaces while nonprofit Blue Cross and Blue Shield plans held steady, according to an analysis the investment bank Stephens published last month.
UnitedHealth Group subsidiary UnitedHealthcare is offering exchange plans in 385 new counties during open enrollment, the most in the industry, according to Stephens. CVS Health subsidiary Aetna announced this week that it is marketing exchange plans in four new sates.
“After having essentially fully withdrawn from the exchange markets after seeing unacceptable levels of losses, both UnitedHealth and Aetna are now both implementing a phased, multi-year strategy to reengage with this health insurance exchange market,” Scott Fidel, managing director at Stephens, wrote in an email.
Health insurance exchange carriers are offering 23% more plans for 2024 than they did this year, Stephens reported. Insurers have narrowed networks and adopted other cost-cutting strategies to compete, Anderson said. “Anything that can be used to drive down premiums, especially unsubsidized premiums, will be adapted,” he said.
Among the large, for-profit companies, Cigna raised premiums by an average of 21.1% to $466 monthly, both the highest among for-profit insurers, according to Stephens. The insurer increased rates and ended operations in Kansas and Missouri after its risk-adjustment charge came in higher than anticipated.
Aetna boosted premiums an average of 12.3%, the second-highest hike among for-profit companies, although the average $419 monthly premium is the lowest from any for-profit insurer, Stephens found.
UnitedHealthcare and Molina Healthcare increased premiums by 8.4% and 8%, respectively, which is higher than the industry average, Stephens reported. Centene increased rates 5.3% and Elevance Health 3.8%, below average, according to Stephens. For-profit Elevance Health sells Blue Cross and Blue Shield plans in 14 states.
Oscar Health is the only for-profit insurer offering lower average premiums for 2024, which are 1.2% less on average than for this year, according to Stephens.
Health insurance companies are also trying to recoup members they lost as states carry out Medicaid redeterminations and remove millions from the program rolls. Less than 8% of those who lost Medicaid have signed up for exchange plans, according to the Center on Health Insurance Reforms.
Those who are leaving Medicaid tend to be healthier and less expensive to insure than those who are staying, Anderson said. “The health status of people who are deterred by the administrative burden tends to be better, and the probability that these folks will sign up for another commensurately complex system is fairly low,” Anderson said.
Because these people previously had health coverage, carriers are not anticipating new members to incure major expenses and worsen risk pools, Corlette said.
Some health insurance exchange participants have developed new products aimed at people with specific health needs or diseases.
Oscar Health, which has 900,000 exchange enrollees this year, is selling policies for people with chronic obstructive pulmonary disease, asthma and diabetes, for example. Centene, the largest exchange carrier with 3.7 million members, offers plans for people with conditions such as depression, lower back pain and coronary artery disease.
Correction: An earlier version of this story cited an erroneous Stephens report that Blue Cross and Blue Shield companies are participating in fewer health insurance exchanges and offering fewer plans for sale during open enrollment this year. Stephens subsequently revised its report to reflect that no Blue Cross and Blue Shield carriers exited any exchanges for the 2024 plan year.