Insurance Market Reform

The Affordable Care Act (ACA) includes certain requirements regarding the adequacy of provider networks developed by health insurers to deliver covered services to their enrollees. The requirements provide broad parameters within which insurance regulators and other state officials responsible for network adequacy must evaluate the networks of Qualified Health Plans operating in their markets. This network adequacy planning tool for states has been updated to reflect the most recent U.S. Department of Health and Human Services regulation on minimum network adequacy standards, and can assist states in developing analysis plans that will inform discussions around updating network adequacy standards.
 

During the transition to new health plans and new marketplaces under the ACA, many insurers revamped their approach to network design, and many now offer narrower provider networks than they have in the past. In this study for the Robert Wood Johnson Foundation’s project to monitor ACA implementation, researchers assessed network changes and efforts at regulatory oversight in six states: Colorado, Maryland, New York, Oregon, Rhode Island, and Virginia. Researchers found that insurers made significant changes to the provider networks of their individual market plans, both inside and outside the marketplaces, and that insurers took varying approaches to network design.
 

In the first year of full implementation, enrollment in the Affordable Care Act’s (ACA) health insurance exchanges largely fulfilled expectations, following a rocky beginning. Now, attention is turning to 2015, and one of the first tangible tests of how well the ACA is working will be the changes in premiums in the new health insurance marketplaces. This brief presents an initial analysis of premium changes for marketplace plans for individuals in 15 states plus the District of Columbia, where comprehensive data was available on rates or rate filings for all insurers.
 

In order to encourage entry and lower prices, most regulated markets for health insurance include policies that seek to reduce the uncertainty faced by insurers. In addition to risk adjustment of premiums paid to plans, the Health Insurance Marketplaces established by the Affordable Care Act implement reinsurance and risk corridors. Reinsurance limits insurer costs associated with specific individuals, while risk corridors protect against aggregate losses. Both tighten the insurer’s distribution of expected costs. This paper considers the economic costs and consequences of reinsurance and risk corridors.
 

The Affordable Care Act has resulted in considerable competition. In a large number of markets, this has resulted in lower premiums than expected, though there is considerable variability within each metal tier. This analysis assesses the variation in premiums within markets and the effects of competition in 10 states: Alabama, Arkansas, Colorado, Maryland, Massachusetts, New York, Oregon, Rhode Island, Virginia, and West Virginia. Four of the states have fairly limited competition, while the other six are very competitive, especially in urban, more populated markets.