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March 31, 2016 at 01:46 PM
The overall state of the U.S. individual commercial health insurance market looked terrible in 2014, but mainly because a large minority of issuers in the market posted big losses.
The percentage of issuers that made money in the individual health market actually increased between 2013 and 2014.
Issuers continued to have a much easier time making money in both the small-group market and the large-group market, but the percentage that generated group health underwriting gains was smaller in 2014 than in 2013.
Colin Gray and other analysts at Milliman have included numbers supporting those conclusions in an analysis of health insurers’ federal Medical Loss Ratio Reporting Form data.
See also: Actuaries trace risk corridor maze
Milliman, a firm that does actuarial consulting work and other forms of consulting work for many health insurers and government agencies, posted the report as health insurers and regulators were gearing up for today’s Patient Protection and Affordable Care Act (PPACA) risk-adjustment program methodology policy meeting in Baltimore.
Health insurers set their 2015 rates, and even their 2016 rates, without clear, complete information about how the PPACA underwriting and plan design rules that took effect in January 2014 actually affected claims.
Before PPACA took effect, some analysts predicted the uninsured consumers who took advantage of the new PPACA rules and subsidies to get covered would be people who had previously gone without health coverage because they were relatively healthy.
Others predicted the new enrollees might tend to look more like the older, sicker people who previously were shut out of the commercial individual health market in states that allowed medical underwriting because insurers saw them as being uninsurable.
For a look at what the Milliman analysts found in the actual 2014 numbers, read on.
1. The 2014 individual health underwriting margins were miserable.
The Milliman analysts found that, overall, the number of U.S. residents with individual health coverage increased to 15 million in 2014, from 11 million in 2013.
The average amount of earned premiums per covered life increased to $303 per month from $247, and the average amount of claims expense per covered life increased to $252 from $210.
The average underwriting loss increased to $18.54 per month, or negative 6.1 percent, in 2014 from $9.68, or 3.9 percent per month, in 2013.
In the small-group market, the number of covered lives fell to 16 million from 17 million. The average underwriting margin narrowed to 1.3 percent from 2.8 percent.
In the large-group market, the number of covered lives dropped to 43 million, from 47 million, and the average underwriting margin fell to 1.7 percent from 2 percent.
