Despite concerns about the stability of the individual insurance market under the Affordable Care Act (ACA) raised in the past year, insurers saw better financial results in 2017 than they did in earlier years of the ACA, suggesting insurer performance was returning to levels before 2014, when new ACA insurance market rules took effect. While the market on average was stabilizing, recent policy changes have the potential to destabilize the individual market. As of October 12, 2017, the Trump Administration ceased payments for cost-sharing subsidies, which led some insurers to exit the market or request larger premium increases than they would otherwise. Open enrollment for 2018 was shorter than in previous years, and the Administration reduced funding for advertising and outreach. In this brief, we look at recently released financial data for the first six months of 2018 to examine how the individual insurance market has responded to recent changes. These new data from 2018 offer further evidence that insurers in the individual market are regaining profitability, though the repeal of the individual mandate penalty as part of tax reform legislation and the likely proliferation of loosely-regulated short-term insurance plans cloud expectations for the future. Second quarter financial data reflect insurer performance through June 31, 2018. Insurers saw better financial performance in the first six months of 2018 than in all the earlier years of the ACA, and are returning to pre-ACA levels of profitability. Markets in some parts of the country remain fragile, with little competition and an insufficient number of healthy enrollees to balance those who are sick. Even so, absent any policy changes, it is likely that insurers would generally have required only modest premium increases in 2018 and in 2019 as well. Insurers are now finalizing rates for 2019. We use financial data reported by insurance companies to the National Association of Insurance Commissioners and compiled by Mark Farrah Associates to look at the average premiums, claims, medical loss ratios, gross margins, and enrollee utilization from second quarter 2011 through second quarter 2018 in the individual insurance market.1 These figures include coverage purchased through the ACA's exchange marketplaces and ACA-compliant plans purchased directly from insurers outside the marketplaces (which are part of the same risk pool), as well as individual plans originally purchased before the ACA went into effect.
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