Last Updated 10/30/2020
Issue: Despite efforts in recent years to stabilize health insurance markets, challenges remain in the affordability of coverage and consumers' access to needed care. Much of this has come as a result of the underlying costs of health care rising significantly faster than other goods and services. National health care expenditures now represent 17.7% of the gross domestic product and are expected to continue to grow. And while seniors are largely protected by Medicare, costly long-term care services remain outside of the program's benefits.
Background: The Affordable Care Act (ACA) aimed to improve the rate of health insurance coverage, especially for vulnerable populations; increase the value of coverage through market reforms; and limit cost growth by encouraging health insurers to compete on price and quality. ACA provisions like guaranteed issue, community rating, the prohibition on pre-existing condition exclusions, and premium subsidies have brought unprecedented access to individual market coverage to many. At the same time, compliance with ACA regulations and limited competition in some areas have driven premiums and cost sharing to unaffordable levels for those who don't receive subsidies and don't have access to other coverage. The Centers for Medicare and Medicaid Services (CMS) has reported insurer exits and rising premiums have priced out those who don't qualify for tax credits and don't have access to coverage through employers. According to CMS, unsubsidized enrollment dropped 20% during plan year 2017 while subsidized enrollment rose 3 percentage points to 87% in 2018.
The Administration has worked to make alternative coverage options available to more individuals and employers through new policies related to association health plans, short-term, limited duration insurance, health reimbursement arrangements, and innovation waivers under the ACA. However, while benefiting some, these policy changes, combined with ongoing legal challenges to both the ACA and the Administration's regulatory actions, have elevated market and policy uncertainty for regulators and health insurance market participants.
Status: In 2020, the NAIC continues to provide non-partisan expertise to Congress and the Administration, particularly on efforts to stabilize individual and small group markets. It also works to relieve consumers from surprise medical bills, including those from air ambulances, and PBMs. NAIC's committees will continue their work to develop model policies and highlight best practices on health care cost control. This includes reviewing long-term care insurance premiums, regulation of pharmacy benefit managers (PBMs) and education of consumers on health insurance and their coverage options.
Specifically, the Health Insurance and Managed Care (B) Committee will examine factors that contribute to rising health care costs and insurance premiums and review state initiatives to address cost drivers. It will also collaborate with the Market Regulation and Consumer Affairs (D) Committee on consumer protection, producer licensing, antifraud efforts, and monitoring of health plans not regulated under the ACA (like association health plans and short-term, limited-duration plans). In addition, the Consumer Information Subgroup of the (B) Committee plans to develop a series of resources to help consumers understand their coverage and get the most value from their plans. The Committee is also carefully monitoring health insurance issues related to the COVID-19 pandemic including telehealth, rate requests, and continuation of coverage for those losing employer-sponsored coverage.
The Center for Insurance Policy & Research (CIPR) has issued a three-part study on health care cost drivers. Among the things included in the study is an exploration a value-based reimbursement model, lifestyle changes, electronic health records (EHRs), technology-driven delivery channels and medical technology advances. The CIPR also held an event focused on exploring health care cost drivers during the NAIC Fall 2018 National Meeting.
Committees Active on This Topic
CIPR Consumer Health Insurance Knowledge Survey
October 2020, CIPR Study
Guaranteed Renewability in Health Insurance: Taking into Account Changes in Risk Status and the Cost of Dying
August 2020, Journal of Insurance Regulation (Article Overview)
Assessment of COVID-19 Recession on Health Insurance Coverage Enrollments
June 2020, CIPR Study
Special Enrollment Periods For Health Insurance Marketplaces
June 2020, CIPR and Wisconsin School of Business
Reinsurance in Healthcare
December 2019, CIPR Regulator Insight
CIPR Health Care Cost Brief
August 2019, CIPR Study
CIPR Health Care Cost Drivers Study - Third Installment
August 2020, CIPR Study
CIPR Health Care Cost Drivers Study - Second Installment
August 2019, CIPR Study
Rising Health Care Costs: Drivers, Challenges and Solutions
December 2018, CIPR Study
A Brief Exploration of Rising Health Care Costs
August 2018, CIPR Newsletter
Drivers of 2019 Health Insurance Premium Changes Issue Brief
June 2018, Academy of Actuaries (AAA)