The Centers for Medicare and Medicaid Services (CMS) released a report on August 11, 2016, entitled, “Changes in ACA Individual Market Costs from 2014 to 2015: Near-Zero Growth Suggests an Improving Risk Pool.” The report states that per member per month (PMPM) paid claims for health insurers in the individual market under the Affordable Care Act (ACA) fell 0.1 percent on average from 2014 to 2015, perhaps due to a broader, healthier ACA risk pool in 2015 than in 2014. As evidence to support that hypothesis, CMS provides data showing that PMPM paid claims for health insurers in the ACA individual market fell 5 percent on average from 2014 to 2015 in the 10 states with the highest 2014-2015 ACA enrollment growth, fell 3 percent in 27 states with medium 2014-2015 enrollment growth, and rose 2 percent in 13 states with the lowest 2014-2015 enrollment growth. As a comparison, the CMS Office of the Actuary estimates that per enrollee costs in the more stable employer-sponsored insurance (ESI) market grew 3 percent on average nationwide in the same 2014-2015 period.
The CMS report notes that many health insurers in the ACA individual market are seeking greater premium increases for 2017 than in prior years but CMS suggests that some issuers may have priced their coverage below actuarial costs in prior years for reasons such as strong competition among insurers to achieve market share and insurers’ difficulties predicting costs in the individual market after the ACA banned coverage denials for pre-existing conditions. The CMS report is available here.