Future market will look fundamentally different as enrollment declines
A new white paper released today by Wakely Consulting Group, an HMA Company, (Wakely) examinesthe potential enrollment and premium impacts of the House budget reconciliation bill, H.R. 1, and the expiring subsidies for the ACA Individual Market.
“Future of the Individual Market: Impact of the House Reconciliation Bill and Other Changes on the ACA Individual Market” analyzes the effects of both the House budget reconciliation bill and the expiration of enhanced premium tax credits (ePTCs). It determines the individual market will look fundamentally different when the full effects of all proposed changes occur. Specifically, the combination of ePTC expiring and full enactment of H.R. 1 could reduce individual market enrollment by 47% to 57% or between 11.2 and 13.6 million individual market enrollees.
“This range includes both direct impacts on subsidized individuals due to net premium increases after premium tax credits and loss of unsubsidized enrollment between 3.9% and 6.1% following significant gross premium increases,” the paper states. “Non-Medicaid expansion states would see especially large enrollment losses with reductions in enrollment ranging between 53% and 64%.”
“This report shows that the totality of the proposed Congressional changes and the expiration of ePTC could lead to a much smaller and less stable individual market,” said Michelle Anderson, FSA, MAAA, one of the paper’s authors. “Enrollment could shrink to the lowest it’s been since the culmination of the ACA Marketplaces in 2014. Remaining enrollees are likely to be sicker and to have higher healthcare needs than those who will drop coverage, which in turn will weaken the risk pool and drive up premiums.”
Other key findings from the Wakely paper include:
- Estimated combined effects could increase gross market average premiums between 7% and 11.5% because of market attrition and residual risk pool morbidity increases, not accounting for incremental claims cost trend impacts.
- H.R. 1 alone could reduce enrollment by 22% to 27%, or 5.2 to 6.4 million enrollees, when layered on top of the expiration of ePTCs.
- Enrollment and premium impacts varied greatly by state; the range of enrollment reductions in some states exceeded the national average range of 47% to 57%, and premium changes also varied more widely than the average increase of 7% to 11.5%.
The white paper analysis of the sunsetting ePTCs and the House budget reconciliation bill effects includes the provisions outlined in the proposed program integrity and affordability rule on the ACA-compliant individual market. Authors used various methodologies, as well as unique data provided by State-Based Marketplaces (SBM) to develop a range of impacts on enrollment and premiums within the individual market. The data represents roughly 50% of the SBM enrollment population. While the full effect of many of the provisions may not be fully realized until 2028 or later, for simplicity, Wakely estimated a range of steady state effects of all changes as if they occurred in 2026.
The white paper was commissioned by Covered California.
Register for July 10 Webinar
Join us to explore findings from the white paper and an in-depth discussion with experts from Wakely, HMA, and Leavitt Partners on the future of the individual market and the impacts of potential Congressional and regulatory changes to the ACA. Register here for “The Future of the ACA Individual Market: Policy Shifts and the House Reconciliation Bill.”
About Wakely Consulting Group
Founded in 1999, Wakely Consulting Group, an HMA Company, is well known for its top-tier healthcare actuarial consulting services. With nine locations nationwide, Wakely boasts deep expertise in Medicare Advantage, Medicaid managed care, risk adjustment and rate setting, market analyses, forecasting, and strategy development. The firm’s actuaries bring extensive experience across all sectors of the healthcare industry, collaborating with payers, providers, and government agencies. Learn more at wakely.com.
