Health Insurance Check-Up; Migration to Medicaid

Number of carriers selling individual health insurance policies for next year by locality. Most places have only one or two. Source: SCC. Click for larger view.

The number of Virginians buying health insurance as individuals is shrinking and may shrink more, with two trends getting most of the credit:  Expansion of Medicaid eligibility and a change in the law that allowed those in business as sole proprietors to buy policies in the small group marketplace.

Individual coverage peaked at 418,000 Virginians in 2016 and dropped to 300,000 by March of this year.  The projection for 2020 is about 303,000 covered that way, the State Corporation Commission was told in a presentation on the health insurance market released July 18.  You can see the full presentation here.

Compared to coverage through an employer’s plan or some other pool, the individual plan premiums, deductibles and co-pays can be crushing.  The SCC is in the process now of reviewing proposed rate adjustments for 2020, which then go on for further review by federal authorities before final approval. Many individual plans will be charging less for 2020, about four percent less on average, Insurance Commissioner Scott White told the judges.

The SCC’s authority extends to small group and individual plans, which represent about 8 percent of the total insurance market, still dominated by employer-sponsored plans (49 percent) either purchased under large group plans (1.15 million people in 2018) or self-financed by the company (3 million people in 2018).  Medicare, Medicaid and other federal plans including military-related coverage accounted for 33 percent.

Some of the other key points brought out by the staff’s presentations, which included information from the Insurance Bureau’s chief actuary David Shae, follow.

An estimated ten percent of Virginians had no insurance in 2018. That was 12 percent a decade earlier, and the recent peak was 13 percent 2010-2012.  Proponents of the Affordable Care Act “would probably have thought it would go down more,” White said, and with full implementation of Virginia’s new Medicaid cutoffs in 2019 that “should go down somewhat dramatically.”

The drop in the individual plan premiums expected for 2020 is because the 2018 premium increases were excessive. When making calculations for 2018, the projections were based on the market’s experience in 2016 and 2017, and thanks to the turmoil over the ACA in Congress and its near-repeal, uncertainty ruled.  After the repeal effort failed, insurers have seen more stability.

Despite the dip in individual premiums, the $651 average weighted monthly premium still reflects a compounded 12 percent annual increase since 2014, Shea said. The small group plans have averaged 5 percent increases annually during that period.

Behind the dip in individual rates for 2020, underlying costs and utilization are still growing steadily. Another expected expense that all the plans are passing along is the return of the ACA health insurance tax (HIT), suspended for 2018 but at this point the moratorium is expected to end.

A sign that premiums after the ACA turmoil were excessive is the loss ratios some plans have since reported, spending less than the required 80 percent of their premium revenue on medical benefits in 2018. Where that happened, policy holders can expect refunds to be ordered by the federal authorities, White said.

Another sign that stability is returning is slight growth of the number of carriers offering coverage around the state, although not every carrier offers plans in every locality. More than 85 percent of Virginia’s localities have only one or two providers of individual coverage, with the most competition showing up in the corridor from Richmond to Washington, DC.

In comparison, everywhere in Virginia at least ten companies offer small group coverage, with some localities seeing fifteen firms compete for that market.

White told the judges that a study requested by staff projects the individual market will shrink to about 220,000 by 2023 with about 70,000 leaving for Medicaid, 25,000 sole-proprietors leaving for the small group market, and 10,000 taking the new option of a Short-Term, Limited Duration Insurance (STLDI) plan intended for those in a transition period.  More about those here. Fewer than 200,000 will remain in the individual market taking the ACA subsidy to help pay their premiums, down from more than 260,000 doing so this year.

That will leave about 20,000 still seeking individual coverage who do not qualify for any ACA subsidy.  “It looks like that is where the damage has been done,” Judge Mark Christie commented from the bench at one point, referring to the impact of the federal ACA.  He worried about people outside of employer plans making too much for Medicaid or a federal ACA subsidy.

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6 responses to “Health Insurance Check-Up; Migration to Medicaid

  1. It is good news to hear that insurance rates will moderate next year for individual policies, but the respite is temporary because the health care system is totally dysfunctional. Insurance is unaffordable because the underlying cost of healthcare is unaffordable. The debate over insurance coverage is all about shifting costs from one group of payers to different groups — subsidies and cross-subsidies that cloud underlying costs and fog decision-making.

    There is no easy short-term fix for the health care crisis. But if Virginia lawmakers want to do something useful, they should focus their attention on win-win policies that boost industry productivity, lower costs, and improve outcomes.

    A year ago, it was Gov. Northam’s intention to turn his attention to healthcare productivity and outcomes once he wrapped up Medicaid expansion. After the blackface debacle, he appears to be emphasizing supposed racial injustices in healthcare delivery instead. What a lost opportunity.

  2. One thing that should be recognized is that folks whose income allows them to buy ACA, cannot shift to Medicaid unless their income is much lower. In general, people whose income is that low do not qualify for ACA.

    In other words, when one looks at the insurance landscape – folks who work and have incomes higher than 400% of the poverty level do not qualify for ACA subsidies nor do they qualify for original MedicAid or the Expansion.

    Agreeing with Steve with further explanation – I think one of the major reasons insurance costs have gone up is the mandatory coverage of pre-existing conditions as well as the repeal of annual and lifetime caps. Whether one agrees or not with the – it was excluding expensive conditions and/or putting caps on the coverage or boosting rates that allow insurers to keep costs lower.

    In other countries with universal coverage, they essentially do this – they do “ration”, i.e. denial of some treatments or longer wait times, etc but ALL insurance IS about “rationing”, we do it in this Country also with Medicare, MedicAid, even the VA AND even the private companies who, for instance, simply will not reimburse for some things.

    I think part of our problem has to do with how much doctors are paid in this country compared to other developed countries AND the fact that we could/should be using MORE Physician Assistants, Nurse Practitioners, etc to do triage, monitor/treat chronic conditions, etc and direct to the doctor – those things they cannot do.

    Also, our folks want “everything is covered” insurance rather than have some skin in the game (and that’s going away).

    Original Medicare required folks to owe 20% and that affected decisions about what treatments to seek, and also optical, dental and ear were not covered at all but now we have Medicare Advantage (subsidized) that covers a lot more and many older now routinely get the Medicare Advantage.

    That essentially means that older Americans are much more/better “subsidized” than low income folks on MedicAid or the expansion or even the ACA or more than a few Employer-provided plans.

    And it does not stop there for older Americans, Medicare will not cover long-term nursing care and for those who did not buy long-term insurance (and even those that did) – MedicAid becomes the payer even though these folks used to get employer-provided, when they get older they are “entitled” to heavily subsidized Medicare as well as Medicaid!

    Despite all of this – Medicare and MedicAid actually do control costs better than private sector insurance because they actually do “ration” fairly severely especially on the MedicAid side – in a nursing home – you get what you get – and that’s it for the most part.

  3. I am “in business” as a sole proprietor, but my income is approaching nothing these days. I wonder what the income requriement is? Does not impact me personally as I have Medicare and a retiree with supplemental benefits. But it is easy to register as a sole proprietor and no BPOL taxes if income is low.

  4. Most anyone 65 and older is “entitled” to buy Medicare Part B (which unlike Part A is not “free”) AND you COULD choose to go find other insurance but good luck on that as Part B costs most folks about $134 a month until you income exceeds some higher level where it would cost more. Someone who is “older” is not going to find many insurance companies who will insure them at an affordable price, if at all.

    Imagine how seniors in this country would fare if there was no Medicare and they had to go buy it in the market?

    Many could not afford it and others, it would take a significant portion of their retirement income.

    So, here’s a question. Should seniors be responsible for saving their money so they can pay for their healthcare in their retirement? What exactly “entitles” them to Medicare – any more or less than others who are provided with Obamacare or MedicAid? Isn’t Medicare essentially welfare just like MedicAid is?

  5. “What exactly “entitles” them to Medicare – any more or less than others who are provided with Obamacare or MedicAid? Isn’t Medicare essentially welfare just like MedicAid is?”
    YES Medicare (and Social Security) are welfare just like Medicaid, Obamacare and any other federal entitlement you want to name and they ALL are illegal and UnConstitutional.

  6. I’m sure you’ll turn them down when the time comes, unless you are already enrolled of course. They were created by acts of Congress, and thus fit the definition of legal, and I’m sure have been well and duly tested in the courts which didn’t strike them down as unconstitutional. What they of course are not is voluntary, and I’ve been paying in for more than 40 years now, so I’m not turning them down.

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