ACA Exchanges

Three quarters into 2023, Moody’s Investors Service says the predictions it made at the start of the year for the health insurance sector — namely, earnings growth in the mid-to-high single digits — have largely proven accurate. However, while financial results were consistent with the credit rating firm’s expectations, analysts said in a new report that the reasons for those results were not exactly what they predicted.

“Our outlook was premised on reduced membership as a result of Medicaid redeterminations and the impact of a possible recession on commercial membership,” the analysts wrote in a report released on Nov. 20. “However, with no recession this year, commercial membership has been better than expected, but its growth has been offset by higher-than-expected MA [Medicare Advantage] utilization.” Additionally, “although Medicaid redeterminations are underway, their impact so far has been relatively small.”

Deep within two new proposed health insurance regulations are provisions that would alter how Medicare Advantage and Affordable Care Act exchanges cover prescription drugs — and some of them are garnering praise from patient advocates.

For example, the HIV+Hepatitis Policy Institute welcomed two of the proposals in the 2025 Notice of Benefit and Payment Parameters (NBPP), the annual regulation governing the ACA marketplaces, which CMS released on Nov. 15.

One of those provisions would codify existing policies surrounding how health plans treat prescription drugs that aren’t part of a given state’s essential health benefits (EHB) benchmark plan. Under the ACA, individual market plans must cover items and services in 10 core benefit categories, including prescription drugs, and each state is responsible for defining which drugs make the must-cover list.

Recently, CMS revealed that health insurers Bright Health Group, Inc. and Friday Health Plans Management Services Company, Inc., have failed to pay $1.1 billion that they owe to other health insurers through the Affordable Care Act’s risk adjustment program. While Friday will never be able to pay its share — since state regulators have taken over the failed insurer — the government’s repayment agreement with Bright is raising questions about whether the current rules governing ACA risk adjustment need an overhaul.

“Insurers that attract high-cost enrollees need to be able to count on being compensated by the risk adjustment system, and if they’re not going to be compensated, then insurers will be less willing to offer generous plan designs,” Matthew Fiedler, Ph.D., a fellow with the Brookings Schaeffer Initiative for Health Policy, tells AIS Health, a division of MMIT.

Merging urban and rural Affordable Care Act marketplace rating areas in Texas significantly increased carrier and plan choices and lowered overall plan premiums in rural Texas, according to a recent Health Affairs study.

When calculating premiums for customers, the ACA permits insurers to consider those customers’ area of residence — or rating area — among other factors including age, smoking status and family size. Yet the use of rating areas can lead to higher premiums for rural areas, where residents tend to have greater health care needs and where there’s a smaller risk pool due to lower population density.

In the 2025 version of the government’s annual mega-regulation governing the Affordable Care Act exchanges, multiple proposals appear to be aimed at ensuring state-based marketplaces are adhering to the same standards that apply to the federal marketplace, HealthCare.gov. One health policy expert says it’s probably not a coincidence that the proposed policy changes would take effect the same year that conservative-leaning Georgia is slated to launch its own state-based exchange.

“I see some proposals in here that are trying to safeguard against efforts to reduce the quality of exchange operations or run an exchange on the cheap,” says Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms.

The beleaguered startup insurers known as “insurtechs” continued to post losses during the third quarter, but executives from Oscar Health, Inc., Clover Health Investments Corp. and Alignment Healthcare, Inc. all said they expected to at least break even in 2024.

However, Bright Health Group and Friday Health Plans, two insurtechs that have ended their insurance operations, together owe billions in unpaid risk adjustment payments to other insurers that participate in the Affordable Care Act marketplaces. CMS on Oct. 27 released details of payment plans for both firms.

Ahead of the 2024 open enrollment period for Affordable Care Act exchange plans that began on Nov. 1, major U.S. health insurers issued a spate of press releases touting their plan options and listing new areas in which they’d offer coverage. While ACA marketplace experts say that 2024 will not feature any seismic changes in terms of insurer competition — given the exchanges’ history of mass insurer exits and panic over “bare counties” with no available health plans, that may be a good thing.

“Overall participation by carriers is down from last year, when there was also a slight decline,” says Katherine Hempstead, Ph.D., who for years has helped produce the Robert Wood Johnson Foundation (RWJF) ACA Marketplace Participation Tracker. “So after several years of increased entry into new states, now we have seen a real leveling off,” adds Hempstead, who is RWJF’s senior policy adviser.

In 2024 compared to 2023, there’s minimal change in terms of HealthCare.gov issuer participation, but shoppers do face a higher average benchmark plan premium, according to CMS. Out of the 32 states that are using HealthCare.gov, eight have more Qualified Health Plan (QHP) issuers in 2024, and 96% of enrollees have access to three or more issuers, compared to 93% in 2023. Yet there are 210 QHP issuers participating in HealthCare.gov next year, an overall decrease of nine compared to 2023. Virginia stopped using HealthCare.gov in 2024.

Centene Corp. reported sterling results in the third quarter of 2023, with the firm exceeding its quarterly earnings target and executing $773 million in share repurchases in that time. Executives promised further improvement on Medicare Advantage Star Ratings and touted notable individual marketplace enrollment growth during the quarter.

Centene executives credited the strong results to membership growth and low utilization in the firm’s Affordable Care Act marketplace book of business. Executives also said that the firm, which mainly has members who are enrolled in managed Medicaid plans, has capably weathered the return of eligibility redeterminations, which were suspended during the bulk of the COVID-19 public health emergency and resumed in the spring. The firm’s total Medicaid enrollment during the third quarter declined by only 2.9% year over year to 15.24 million members.

In 2024, the average monthly premium for a benchmark silver plan on the federal Affordable Care Act exchange will rise by 4% compared to 2023, CMS revealed on Oct. 25. Premiums for a benchmark plan, or the average second-lowest-cost silver tier plan, are used to calculate advance premium tax credits (APTC) that rise in tandem with premium rates. CMS noted that the year-over-year benchmark plan premium increase of 4% between 2023 and 2024 is the same as the increase seen between 2022 and 2023. Also continuing next year will be enhanced subsidies that make ACA exchange plans much more affordable than they were before the American Rescue Plan Act (ARPA) of 2021. To that end, the average benchmark plan rate after premium tax credits are applied, for a 40-year-old at 150% of the federal poverty level, will continue to be $0 in 2024 — compared to $55 before ARPA was enacted.