Sometime in the waning months of 2013, the notoriously kludgy ACA website began to find its footing in Pennsylvania—and beyond.
But medical economists, insurance commissioners, and academics warned that it would take at least five years for the ACA exchanges to shake all the bugs out.
If the rate filings for 2018 in Pennsylvania are any indication, then the shakeout has occurred—and hello, stabilization. After premiums for 2017 increased, on average, by 32.5% over premiums for coverage in 2016, rate filings by insurers for 2018 show rates going up by only 8.8% over 2017 rates.
“I think our individual market is really on the path into stabilizing,” says Teresa Miller, Pennsylvania’s insurance commissioner, who was appointed by Democratic Gov. Tom Wolf. “It shows our insurers are better understanding the market. We always knew there would be a transition.”
ACA enrollment has been fairly stable in Pennsylvania, showing none of the death spiral dynamics that President Trump and other ACA critics have talked about. In July 2014, a little more than 318,000 Pennsylvanians had purchased coverage through the ACA exchanges. This year, enrollment was 426,000, a 33% increase.
The state did not expand Medicaid until April 2015. Since then, the number of Pennsylvanians covered by Medicaid has increased from 2.4 million to almost 3 million, which has boosted Medicaid costs by about $5 billion per year.
Like many states, Pennsylvania has seen the number of insurers selling policies on the exchanges shrink and, in large parts of the state, there’s only one insurer doing business. UnitedHealthcare and Aetna jumped ship last year. The five remaining companies are losing money in the nongroup ACA market, but they are long-standing, community-based carriers with deep roots, she says.
The remaining insurers—Independence Blue Cross, Highmark Blue Cross, Geisinger Health Plan, UPMC Health Plan, and Capital Blue Cross—are spread across the state’s nine rating areas and none offers plans in all nine regions. In the Philadelphia market, which includes the city and four surrounding suburban counties, Independence Blue Cross is the only ACA exchange insurer. Out west, Pittsburgh and Allegheny County are serviced by UPMC and Highmark, while Geisinger and Capital offer plans for the middle and northern parts of the state.
Miller says premium rates may have more to do with the provider market and what insurers must pay than with competition—or lack thereof—among insurers. In Philadelphia, the provider side of the street is dominated by the University of Pennsylvania Health System, although it does have some stiff competition from the Temple and Jefferson University health systems and the Einstein Healthcare System.
Not so in Pittsburgh. The University of Pittsburgh Medical Center, with operating revenue of $12.8 billion in 2016, is the largest provider organization by far and also has its own health insurance plan. But partly because it is an integrated system, the UPMC insurance plan has some of the lowest rates in the state.
Burden on states
The one thing that would keep rates on an even keel in Pennsylvania would be a crystal ball about the ACA–AHCA future. None of those were available as we went to press. But as part of its rate-review process, Miller says the state asked insurers what their rate increase would be if the individual mandate was repealed or cost-sharing reductions were not paid. If both were to happen, Miller says the filings show rates will go up 36%.
“My only fear now, and I think the concern of all of our companies remaining have expressed, is the concern about what is coming from Washington,” she says. Over the past several months, Miller and several members of the Wolf administration have been working on proposals to present to the state legislature should a repeal-and-replace law reach President Trump’s desk.
“The concern we have with the American Health Care Act is it certainly seems to be trying to put the financial burden back on the states,” Miller says. “We could put things in place, but at the end of the day I just don’t know where we would find the funding to really truly create what the ACA has done in Pennsylvania.”