Last Updated 2/11/2021
Issue: Despite efforts in recent years to stabilize health insurance markets, challenges remain in the areas of coverage affordability and consumers' access to needed care. This is due to the underlying costs of health care rising much faster than other goods and services. National health care expenditures now represent 17.7% of the gross domestic product, and they are expected to continue to grow. While seniors are largely protected by Medicare, costly long-term care (LTC) services remain outside of the program's benefits.
Background: The federal Affordable Care Act (ACA) aimed to: 1) improve the rate of health insurance coverage, especially for vulnerable populations; 2) increase the value of coverage through market reforms; and 3) limit cost growth by encouraging health insurers to compete on price and quality. ACA provisions (e.g., 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, both compliance with ACA regulations and limited competition in some areas have driven premiums and cost sharing to unaffordable levels for those who do not receive subsidies or have access to other coverage. The federal Centers for Medicare and Medicaid Services (CMS) has reported that insurer exits and rising premiums have priced out those who do not qualify for tax credits or have access to coverage through employers. According to the CMS, unsubsidized enrollment dropped by 20% during plan year 2017, while subsidized enrollment rose three percentage points to 87% in 2018.
The former Administration worked to make alternative coverage options available to more individuals and employers through new policies related to association health plans (AHPs); short-term, limited-duration (STLD) insurance; health reimbursement arrangements; and innovation waivers under the ACA.The new Administration has already reversed the position on AHPs and could make changes in other areas. The Administration has also extended access to coverage on the federal insurance exchange due to the continuing pandemic and enhanced outreach.
Status: In 2021, the NAIC continues to provide nonpartisan expertise to the U.S. Congress (Congress) and the Administration, particularly on efforts to stabilize individual and small group markets. The NAIC is also working to implement the "No Surprises Act," which will relieve consumers of surprise medical bills, including those from air ambulances. The 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 (LTCI) premiums, regulating pharmacy benefit managers, promoting telehealth, and educating consumers on health insurance and their coverage options.
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 the monitoring of health plans not regulated under the ACA ; i.e., AHPs and STLD plans. The Consumer Information (B) Subgroup plans to develop a series of resources to help consumers understand their coverage and get the most value from their plans. The Health Insurance and Managed Care (B) 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. The study includes an exploration of 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 (JIR) (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)