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Milliman Annual Report provides insights into U.S. PPACA program stability

March 2017

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Actuarial firm Milliman in March 2017 released its annual report on the U.S. commercial health insurance market’s financial results .

Based on medical loss ratio data submitted in 2016 to the Centers for Medicare and Medicaid Services, the report provides a clear picture of health insurers’ financial experiences in each year, and provides a final accounting of insurers’ financial results after “3R” transfer payments have been completed.

The report details accounting results for 2015, which was the second full year of the Patient Protection and Affordable Care Act (ACA).

The report also summarizes insurance marketplace enrollment through 2016 as well as corresponding federal expenditures on premium and cost-sharing assistance.

The report will be helpful in helping legislators analyze the effect of current ACA financial assistance components to consumers and the impact from marketplaces and “3R” programs on the industry.

Key points in the report:

  • Underwriting margins in the individual market deteriorated from a 6.0% earned premium loss in 2014 to a 9.6% loss in 2015. 2015 underwriting losses were due in large part to the risk corridor program funding shortfall.
  • With no funding currently scheduled, the cumulative risk corridor payment shortfall has reached $8.3 billion with nearly 90% owed to insurers in the individual market.
  • Since 2013, individual market enrollment has increased from 10.9 million to 17.5 million driven by the introduction of the insurance marketplaces and associated premium assistance. Conversely, the fully insured small group enrollment has shrunk from 17.3 million to 14.7 million attributable primarily to fewer small employers offering coverage.
  • The insurance marketplaces continued to take on a greater role in the individual health insurance market with 56% of estimated 2016 market-wide enrollment attributable to coverage purchased in the marketplaces relative to only 36% in 2014.
  • From 2014 to 2016, the percent of individual market enrollees receiving premium assistance has increased from 31% to 47%. Similarly, enrollment in cost-sharing reduction plans is estimated to have increased from 21% to 32% of national individual market enrollment.
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