ACA premiums are reasonable, grew modestly in 2016, and risk scores are stable.

Here are the results from CMS reports from June 30, 2017 and 2016:

2016 National average premium in the ACA Marketplace: $414.54 (CMS, 2017, page 9.)

This is less than the (employee plus employer) premiums offered where I work. This number includes the cost of the subsidies that are not paid by the enrollee.

2015 to 2016 Percentage changes in enrollment weighted monthly premium for ACA Marketplace plans:

  • 7.4% change in Individual market
  • 2.0 % small group market
  • 0.9 % change in catastrophic plans
  • 5.8 % change in national average ACA premiums

(Sources:  CMS, 2017, Table 3 and CMS 2016, Table 3.

The high growth rates that have been featured in the media are not representative of changes in the averages, or are distorted by calculations using only the consumer share of premiums, which are often heavily subsidized.

“Risk scores were stable in the individual market and decreased by 4 percent in the small group market.“  CMS, 2017, page 5.

There was no evidence of a death spiral nationally, or that the exchanges are unsustainable nationwide, even if some states are in trouble because they did not allow the Medicaid expansion or promote the exchange.

Sources:

Summary Report on Transitional Reinsurance Payments – CMS.gov

https://www.cms.gov/CCIIO/…/Summary-Reinsurance-Payments-Risk-2016.pdf

https://www.cms.gov/…/June-30-2016-RA-and-RI-Summary-Report-5CR-063016.pdf

Instead of the national averages, the media has generally been discussing outliers. Plus this data shows that the average health status in the plans was stable, not exploding last year. There is no evidence nationally of a death spiral.

These national average monthly premiums ($414) are lower than the total premiums for single coverage plans offered at Boston Unviersity (currently $636 and $599 for employer+employee contributions).

The following July 21 2017 report from the Wakely Consulting Group ( a consulting firm) is the most up to date analysis  I have seen.

A Preliminary Analysis of the 2016 Summary of ACA Risk Adjustment Transfers and Reinsurance Payments

One Comment

Sunil Nihalani posted on October 23, 2017 at 4:37 am

Thanks to risk-adjustment, the more successful such plans are in achieving low-risk enrollment pools, the more they’ll get dinged for a payment each year.

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