ACA Exchanges

At first blush, The Cigna Group’s second-quarter financial results largely impressed equities analysts, with a higher-than-expected risk adjustment payable representing one of the few headwinds reported by the company.

“Overall, 2Q results look solid and generally in line with expectations versus a backdrop of elevated concern around trend,” Leerink Partners’ Whit Mayo advised investors in an Aug. 3 research note. The latest round of managed care earnings reports has been closely watched by investors amid disclosures from industry bellwether UnitedHealth Group that the firm is seeing elevated medical utilization.

Cigna reported adjusted earnings per share (EPS) of $6.13 for the quarter, beating the Wall Street consensus estimate of $6.04. The diversified health care company — which owns insurer Cigna Healthcare and PBM Express Scripts, among other assets — raised its full-year 2023 revenue projection by $2 billion to $190 billion, and it reaffirmed its adjusted EPS guidance of at least $24.70.

As health insurers decide how to price their Affordable Care Act exchange plans for the 2024 plan year, inflation, COVID-related costs and Medicaid redeterminations are some of the major factors influencing their calculations, according to a new issue brief from the American Academy of Actuaries. Industry experts say that overall, gross premiums are likely to go up — but because few consumers will feel the impact on their net premiums thanks to expanded subsidies, insurers and regulators may not be driven to aggressively keep rates in check.

“I think the early read right now is the rate increases are going to be higher than last year,” says Fritz Busch, a principal and consulting actuary at Milliman who helped produce the report. In 2023, the average benchmark ACA exchange premium rose by 3.4%. “It’s going to vary by state, but you’re already seeing some [rate requests] well into the double digits — and some single as well — but I think, on average, it’s going to be higher.”

Participants in the Affordable Care Act risk adjustment program will pay a record $9.24 billion for the 2022 benefit year, according to CMS. Among the 608 issuers that participated in the program, startup insurers owe the highest amounts of payouts, while a handful Blue Cross Blue Shield companies are slated to receive significant payments.

The ACA’s risk adjustment program, launched in 2014, transfers funds from insurers that cover lower-risk enrollees to insurers that cover higher-cost and higher-risk populations in the individual and small group health insurance markets.

Enrollment in both commercial health coverage and public health insurance slightly increased over the past six months, according to AIS’s Directory of Health Plans. Managed Medicaid membership continued to grow, from 74.0 million in 2022 to 76.5 million in 2023, while a record high 16.7 million people enrolled in Affordable Care Act marketplace coverage. Commercial (employer-based) health coverage grew by nearly 1 million lives, with several major national health plans reporting double-digit growth.

In a new proposed regulation, the Biden administration seeks to reinstate limits on short-term, limited-duration insurance (STLDI) plans that the Trump administration had loosened — a move that health policy experts predict will have a small but positive effect on the Affordable Care Act-compliant plan market.

But HHS and the Labor and Treasury departments didn’t stop there — they also proposed changes to hospital and fixed indemnity policies and sought comments on whether they should address the proliferation of level-funded plans in future rulemaking.

“I thought that was interesting,” says Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “That seems like kind of an effort to, as much as possible, tidy up all those shards of business in the marketplace that are not good for the ACA-compliant market — either the individual or small group [segment].”

CMS on July 7 unveiled a long-awaited regulation that would crack down on short-term, limited-duration insurance (STLDI), which some consumer advocates — and the Biden administration — refer to as “junk plans.” Designed to fill a temporary gap in insurance coverage, STLDI plans are exempt from the Affordable Care Act’s rules for comprehensive coverage, allowing them, for example, to deny coverage for preexisting conditions and set lifetime and annual dollar limits on coverage. The Obama administration capped the duration of such plans at three months and limited their renewability, but a 2018 rule from the Trump administration allowed STLDI plans to cover individuals for up to 364 days and be renewed for up to 36 months. If finalized, the Biden administration’s notice of proposed rulemaking would return to the Obama-era three-month limit for SLTDI plans’ initial contract period, and it would set the maximum coverage period at four months, taking into account any renewals or extensions.

After two months of shopping around its Medicare Advantage business, Bright Health Group, Inc. on June 30 unveiled plans to sell its remaining insurance assets to Molina Healthcare, Inc. in a deal worth approximately $600 million. The transaction will allow the “insurtech” to focus on its consumer care delivery business, which serves fee-for-service Medicare, Medicaid and Affordable Care Act marketplace customers, while enabling Molina to continue its strategic growth in the niche low-income MA space.

Bright in late April disclosed plans to divest its California MA business, Brand New Day and Central Health Plan, to qualify for an extension of an amended agreement with its creditors. (Bright previously exited the ACA exchange business in all 15 states where it operated.) Upon completion of the sale, which is subject to regulatory approval and other closing conditions, the proceeds will provide a significant boost to Bright’s capital position. The company explained in a June 30 press release that it “intends to use the proceeds to satisfy its obligations to its bank lenders with the remaining proceeds used towards liabilities in its discontinued ACA insurance business.” Additionally, it has extended a waiver and amendment to its credit facility.

The percentage of LGBTQ+ adults with health care coverage increased from 76% in 2013 to 91% in 2019, due to the Affordable Care Act and the 2015 Supreme Court ruling on same-sex marriage equality, according to a new Health Affairs study.

An analysis of Health Reform Monitoring Survey data showed that, historically, LGBTQ+ adults were less likely to access health care coverage. Yet the disparities between LGBTQ+ and non-LGBTQ+ adults began to decline in 2014 when the main coverage provisions of ACA went into effect. By 2019, coverage rates for LGBTQ+ people (91.2%) were comparable to those of non-LGBTQ+ adults (90.6%).

Friday Health Plans Management Services Company, Inc. is in the death throes of its life as an Affordable Care Act exchange insurer — regulators are stepping in to take over its operations, and it’s laying off all employees in its home state of Colorado. Meanwhile, Bright Health Group, Inc., which has already exited every ACA exchange in which it operated, reached a deal to sell its California Medicare Advantage plans to Molina Healthcare, Inc. in order to satisfy Bright’s creditors.

Experts tell AIS Health, a division of MMIT, that both insurers largely followed the same playbook: raising massive amounts of funding from venture capital (VC) investors and promising to delight customers with tech-driven, differentiated products. But those big plans fell apart when faced with the realities of an industry that is especially challenging to disrupt, and then capital infusions dried up when interest rates rose.

North Carolina and Colorado recently became the latest in a string of states that have taken over the reins of Friday Health Plans Management Services Company, Inc.’s subsidiaries in a bid to ensure consumers and providers aren’t harmed by the insurer’s implosion. The company’s downfall has implications for health insurers, too, as they may not receive the risk-adjustment funds they’re expecting if Friday can’t pay its share, an industry expert previously told AIS Health.

Insurance Commissioner Mike Causey said June 20 that Friday Health Plans of North Carolina Inc. “consented to being placed into receivership to protect North Carolina policyholders due to its reported insolvency and inability to raise additional funds from outside investors.” Technically, the action is not yet completed, as the state said it filed its receivership petition with the Wake County Superior Court and will post the order on the North Carolina Dept. of Insurance's website once it is signed.