October 12, 2018
Individual Markets: Profits and Premiums
A slew of individual market data and news stories have been released in the past week so a few highlights:
2018 Profitability: Kaiser Family Foundation released new data that at the halfway point in 2018, average individual market gross margins per member per month (pmpm) reached $155.70. This is about 67% higher than at the same time last year and 400% higher than at this point in 2016. The dramatic increase in profitability is because while premiums pmpm grew 23% between 2017 and 2018, claims cost pmpm only increased 10%.
2019 Premiums: CMS released data on 2019 healthcare.gov premiums and issuer participation. Overall the second lowest silver premium DECLINED 1.5% between 2018 and 2019. In addition, issuer participation is higher in 2019 relative to 2018. In 2019 only 5 states will have one issuer, which is half of what it was in 2018 (10). In fact, a majority of enrollees (58%) will have access to three or more issuers.
There is a connection between these two stories. As Matt Fiedler wrote, higher issuer profitability in recent years is putting downward pressure on premiums in 2019. The higher profits may also be attracting expansion of issuers’ footprint in the individual market.
CSR Case: A major ruling in a CSR case also happened. As a reminder, in October of last year the Trump Administration halted CSR payments. Multiple issuers sued the government over the lack of payment. This week the US Court of Federal claims ordered CMS to pay Montana Health Co-Operative $1.2 million it was owed in 2017. The US government could appeal this ruling (it’s the second major case its lost). The ruling also does not preclude issuers suing the Federal government for missed CSR payments in 2018 or 2019 (despite collecting premiums for the increased CSR related costs).
Regulation Watch: Speculation continues to increase that the Trump Administration will release the long awaited HRA regulation. As a reminder this rule could result in changes to both the group and individual markets.
Medicare Data Release: CMS released its 2019 Part C and Part D Star Rating Data. Approximately 45 percent of Medicare Advantage plans that offer prescription drugs had a rating of four or five stars. 31 percent of stand-alone Medicare Part D prescription drug plans had a rating of four or five stars.