Now that the dust has settled on year two of open enrollment for the health insurance exchanges, it's a good time to bust a few myths about the program.
Myth No. 1: Insurers will lose money on the exchanges.
Some predicted disaster for the health insurance industry, which for the first time had to take all enrollees, regardless of pre-existing medical condition. But 2014 turned out to be a very good year for the most of the national insurers. Anthem, which enrolled 1.8 million exchange enrollees, the most of any insurer, reported net income up 3 percent from 2013. Aetna enrolled 560,000 in the exchanges and posted net income up 6.6 percent over 2013. Some insurers did lose money on their exchange business. Blue Cross and Blue Shield of North Carolina reported its first loss in 15 years, due to medical costs associated with Affordable Care Act members and poor performance in Medicare Advantage products. The insurer reported that its average ACA individual member incurred medical costs of $435 per member, per month, while non-ACA individual members racked up an average of $256 per member, per month in 2014. PreferredOne dropped out of the exchange in Minnesota after incurring higher-than-expected medical expenses. The national insurer Centene, on the other hand, increased profits by 59 percent, growing its Medicaid enrollment by 700,000 and signing up 78,000 exchange members. Of course, we won't know for another year or so exactly how much medical care these previously uninsured enrollees will consume. No doubt there was some pent-up demand that will be met with doctor visits, procedures, and prescription drugs over the coming year. But the actuarial mix is decent: about a third are young adults, ages 18-34. And in the meantime, the sky is not falling for insurers.
Myth No. 2: Premiums will skyrocket.
There were affordable options in all of the states last year, and that holds true in 2015 also. Average premiums for a 40-year-old are $325 in 2015, based on the price of a silver plan, according to an analysis by HealthLeaders-InterStudy. (This is not adjusted for the effect of subsidies, which lower the cost for more than 80 percent of enrollees.) Overall, premiums for a 40-year-old on a silver plan were up an average 4.7 percent. For the majority of states, average premium increases were in the single digits, and in 12 states, average premiums are actually lower this year. Competition appears to play a role in pricing. Of the 12 states where average premiums have gone down, five have 10 or more insurers on their exchanges. Average premiums for a 40-year-old range from $224 in Minnesota to $535 in Alaska. The market is also getting more competitive. UnitedHealthcare, which largely sat out the exchanges last year, is now participating in 23 states and has competitive prices. In Pennsylvania, UnitedHealth Group's average premium for a 40-year-old is $215, compared with a state average of $293.
Myth No. 3: New enrollees won't be able to find doctors.
The number of primary-care visits due to Obamacare is projected to increase by just 3.8 percent, according to a new study released by The Commonwealth Fund. That amounts to 70 additional visits per year, per primary-care physician, or 1.3 visits per week. That partly reflects the increased use of physician extenders such as nurse practitioners. There are only 17 states in which primary-care visits are expected to increase by more than 4 percent. In addition, another Commonwealth Fund study found that 75 percent of people with new Medicaid or ACA coverage who had tried to find a new primary-care doctor since enrolling in their new plan found it was "very easy" or "somewhat easy" to do so.
De-bunking the myths around healthcare exchanges may help pharmaceutical companies better understand how to target geographies, payers, and consumers for access to their products. One of the certainties of public exchanges is the large influence of premium rates on consumer purchasing, and the related growth of covered lives among health plans. It's critical, therefore, to understand how premium increases and changes in market players will guide exchange successes and failures in year two.
Follow Sheri Sellmeyer on Twitter @SheriSellmeyer