The U.S. Supreme Court could turn the individual major medical insurance market inside out and upside down by June, but agents and brokers are willing to take a chance on it continuing to exist.
The producer registration website for HealthCare.gov, the federal government’s Affordable Care Act (ACA) public exchange system, shows that 39,668 producers had signed up to sell exchange plans as of Oct. 18.
The number of registered producers is 7.1% higher than it was a year earlier, and 14% higher than it was at the same point in 2017, which was the first year when the administration of President Donald Trump started out in charge of the ACA public exchange program.
- Links to resources for agents and brokers who offer ACA exchange plans is available here.
- An article about the importance of agents and brokers to HealthCare.gov is available here.
HealthCare.gov ended up with 61,050 registered agents for 2020 coverage, and it appears to be on its way to being a major coverage distributor.
Integrity Marketing, a Dallas-based insurance distributor that has been growing rapidly through acquisitions, has said that it has relationships with 275,000 producers.
Another major distributor, AmeriLife of Clearwater, Florida, says it has relationships with about 150,000 agents and advisors.
HealthCare.gov alone has relationships with about 8.3 million consumers, and the locally run ACA exchanges established by states like California serve about 3.1 million people.
Individual major medical enrollees generate only about 25% as much commission revenue per enrollee as Medicare plan enrollees generate. Based on its size, its low projected commercial value per enrollee, and the current market valuations of private insurance exchange company companies, such as eHealth and GoHealth, HealthCare.gov appears to have a market value of about $4 billion to $8 billion.
The ordinary open enrollment period for 2021, or period when people can buy coverage without showing they have what the government sees as a good reason to be buying coverage, is set to start Nov. 1 and run until Dec. 15 in most states.
Here are seven other ideas about how the individual major medical market could work in 2021.
1. The Supreme Court could make the ACA just go poof.
The U.S. Supreme Court could also eliminate part or all of the ACA at any time between now and late June, through a ruling on the Texas v. California ACA constitutionality case, with no guarantee that it would allow any transition period that insurers could use to adjust to sudden changes in federal health insurance standards.
The ACA is so big and complicated that the sudden disappearance of the law could also have other strange effects, such as the return of the Medicare Part D “donut hole.” The Medicare Part D donut hole is the gap between where routine Medicare drug coverage ends and catastrophic drug coverage begins.
A court decision invalidating all of the ACA could also affect nursing student loan programs, nursing education grants, elder justice laws, adoption assistance programs and health care fraud sentencing guidelines.
2. Prices for 2021 coverage will be about the same.
Agents have been getting notices from some carriers that want to cut or eliminate 2021 exchange plan sales commissions, but 2021 pricing suggests that many carriers are happy with their 2020 individual major medical market performance.
Charles Gaba, the editor of ACASignups.net, an ACA exchange system tracking blog, is estimating, based on an early, incomplete collection of approved 2021 rates, hat individual health rates could increase an average of about 0.4% in 2021, to about $578 per month.
The Centers for Medicare and Medicaid Services (CMS), the agency that runs HealthCare.gov — a government-run, web-based market that will help people in 36 states buy 2021 coverage from private insurers — says the average premium for a “benchmark plan” will be 2% lower in 2021 than the comparable 2020 premium.
The benchmark plan is the second lowest cost “silver” plan, or plan offering mid-level benefits. The ACA calls for Internal Revenue Service to base moderate-income exchange plan users’ premium tax credit subsidies on the cost of the second lowest cost silver plan.
For 2021, in HealthCare.gov states, the full, unsubsidized cost of the average monthly benchmark plan will be $379 for a 27-year-old individual coverage holder, and $1,486 for a typical family of four.
In one HealthCare.gov state, Delaware, average individual rates are set to fall 1%. The benchmark rate there will be $442 per month.
In another HealthCare.gov state, Michigan, insurance regulators say 2021 rates will increase 1.1%. That state’s individual market now serves 322,874 people. The benchmark rate for a 27-year-old there will be $285 per month.
Most insurance regulators and ACA exchange managers outside of the HealthCare.gov service area are saying their average 2021 rates will also be lower, flat or slightly higher.
Managers of Covered California, California’s ACA exchange, say that average rates for individual major medical coverage will be 0.5% lower there in 2021, and that average small-group rates will increase just 1.5%.
Covered California serves about 1.5 million individual and family coverage users and about 62,000 workers who have coverage through small-group exchange plans.
Covered California officials have said that about half of their enrollees come in through agents.
Managers of Connect for Health Colorado, Colorado’s ACA exchange, say the average premium for individual major medical coverage sold in Colorado in 2021 will be 1.4% lower than the 2020 average.
Connect for Health Colorado has helping about 160,000 people get covered. It says 46% of those people enrolled in exchange plan coverage with the help of brokers, and that 6% of those people enrolled in coverage with help from nonprofit assisters.
In many states, rates spiked sharply in 2017 and 2018, because of the end of a temporary federal ACA reinsurance program, which used cash payments from all coverage providers to help insurers pay for care for individual coverage holders with catastrophic claims.
Many states have been replacing the federal ACA reinsurance program with their own state-run reinsurance programs, using a combination of federal and state money, and those programs began to stabilize premiums starting with coverage for the 2019 plan year.
One challenge for agents and others who are looking at the full “rack rate” prices is that more than three quarters of exchange plan users in most states get ACA premium tax credit subsidies. For a low-income exchange plan user, a subsidy could cut the net, out-of-pocket monthly cost of coverage to less than $50, from $500 or more.
In some cases, because of the way the subsidy formulas work, stable or falling rates for full-price exchange plan users could translate into big increases in the net monthly costs for the users who get subsidies.
3. New ACA public exchanges will come to life.
Nevada started out in 2014 with its own, locally run ACA exchange, had big technical problems, and began using HealthCare.gov systems to handle enrollment. Nevada returned to using its own Nevada Health Link website for exchange services for the 2020 coverage year.
For the 2021 coverage year, New Jersey will start enrolling exchange plan users through its own GetCoveredNJ website.
Pennsylvania will be offering exchange services through Pennie.com.
For financial professionals, one reason to watch local exchanges is to keep tabs on the competition.
Another reason is that local exchanges may offer “assistance finder” directories that can serve, in effect, as lead-generation services.
A third reason is that, in some cases, the boards and consultants involved in running local ACA exchanges post market research surveys and analyses that might be of interest to anyone marketing products or services to low-income or middle-income consumers.
4. The election will change the mood.
Either Donald Trump will continue to be the president in 2021, or Joe Biden will be the president.
Party control over the House and the Senate could change or be the same.
If Biden becomes president, changes in how managers of ACA programs operate may become obvious very quickly.
If Trump stays in the office, then his second term in office might be as different from his first term as a Biden administration would be.
Trump and members of Congress might see Trump winning re-election as clear confirmation of the idea that a majority of voters would like to see the federal government replace the ACA framework with something else.
Or, if Trump stayed in the White House, the House stayed in Democratic hands, and the Democrats gained a majority in the Senate, Trump could focus more on efforts to change the current ACA framework than to eliminate the ACA.
5. Trump could choose between Trump Care 1.0 v. A Whole New System v. Trump Care 2.0.
Trump and his team have modified the original ACA framework in some ways and created what might be described as a Trump Care 1.0 system.
If Trump has a second term in office, he could continue to run Trump Care 1.0 about the same way, or he could try harder to eliminate the ACA and move toward a new, health account-based system.
Trump could also continue to work within the ACA framework while making major framework changes.
Last week, for example, CMS approved an ACA Section 1332 waiver program application from Georgia. The proposal calls for Georgia to continue to offer ACA individual major medical premium tax credit subsidies, but through commercial health insurance agents, rather than through the federal government’s HealthCare.gov system.
Shifting to reliance on agents might not be that big of a change in some states. CMS officials reported about a year ago, in a slidedeck, that about 44% of HealthCare.gov’s 2019 enrollments came in through agents.
But the waiver approval announcement suggests that Trump Care 2.0 could involve eliminating or privatizing HealthCare.gov.
6. Biden could make everyone say what they see in the public option inkblot.
If Biden becomes president, he could run the current ACA programs in about the same way.
The alternatives under discussion are setting up a government-run, single-payer, Medicare for All health finance system, or adding a public option program.
Only about one-quarter to one-third of the Democrats in Congress have been open supporters of Sen. Bernie Sanders’ proposal for setting up a pure, government-run, single-payer health finance system.
Many other Democrats have parried the single-payer proposals by saying they will support some kind of “public option” program, or effort to create a government-managed alternative to ordinary commercial health insurance.
But each Democratic member of Congress appears to have a different vision of what a public option plan would look like.
Biden, for example, said during a Sept. 29 debate with Trump that his public option plan would serve only low-income people who earned slightly too much to qualify for Medicaid. The program he described appears to resemble the Basic Health Program plans that New York and Minnesota already offer.
New York, for example, hires ordinary commercial insurers to provide its Basic Health Program plans, and its Basic Health Program plans co-exist peacefully with ordinary commercial individual major medical policies from about 10 issuers.
Analysts at Moody’s Investor Service have suggested that some other, broader types of public option plan proposals could lead to headaches for commercial health insurers.
“A public option that hinders competition through benefit design and/or non-market pricing would weaken earnings for many of our rated insurers,” StefanKahandaliyanage and other Moody’s analysts write in a recent look at the implications of the elections for U.S. health insurers.
7. Big proposals could lead to long battles in Congress.
Implementing Democratic proposals to create big new health finance programs would likely take more help from Congress than implementing Republican to kill the ACA and return federal health insurance rules to where they were in 2009.
If a Democratic public option proposal would lead to serious financial problems for big health insurers, rather than creating attractive new bidding opportunities, that kind of proposal could run into strong opposition from some Democrats in Congress as well as from Republicans.
Even if a disruptive public option proposal got through Congress, passing the proposal and implementing it could take at least two or three years.
When former President Barack Obama signed the two pieces of legislation that created the Affordable Care Act, in 2010, only minor, uncontroversial programs, such as a special insurance program for people with serious health problems, came to life in 2010. Most ACA programs, such as the ACA public exchange program came to life only in 2014 — six years after Obama became president.
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