On September 13 and 14, the University of Pennsylvania Law School, Penn LDI, and Princeton University’s Center for Health and Wellbeing will host the Sixth Annual Health Insurance Exchange Conference. This nonpartisan, off-the-record workshop brings together senior state policymakers and researchers studying health care markets to discuss the latest research on the exchanges and current challenges. This year’s event will focus on stabilization, segmentation, and expansion in the individual market.

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While Congressional efforts to repeal the Affordable Care Act (ACA) have stalled, the Administration has made many modifications to one of the law’s key creations: the health insurance exchanges, through which most people buying their own health insurance get coverage. Some suggest the Administration is “sabotaging” the ACA by undermining the individual insurance market, but other evidence indicates that the market may be stabilizing and consumers will face only small premium increases in 2019, if any.

There has been a flurry of new information on the current and projected state of the individual market. It paints a mixed picture of the outlook for 2019.

ACA “sabotage”

Last year, the Trump administration ended cost-sharing reduction payments (CSRs) to insurers that allowed them to subsidize costs for low-income enrollees. They also cut funding for outreach and enrollment activities that help consumers find coverage, and reduced the federal open enrollment period. Although 15 states saw enrollment increase, evidence suggests that the Administration’s actions may still have affected enrollment numbers in many states. Many insurers also reduced their service areas in 2018 or exited the market altogether, while others factored their CSR losses into premiums for silver-level plans or increased premiums across all plans.

Most recently, the Administration gave the go-ahead to non-ACA compliant health plans and gave states greater oversight of key ACA plan functions, including essential health benefits, medical-loss ratios, and rate review. Congress also eliminated the ACA’s individual mandate penalty, and starting in 2019, consumers will no longer be subject to a tax penalty if they lack insurance. These changes may not only jeopardize essential consumer protections, but they could also encourage healthier individuals to leave the exchanges or forgo insurance entirely, thereby driving up premiums for those who remain and threatening market stability.

Evidence of stabilization

Despite these changes, there are signs that the individual market may be stabilizing. Insurers’ financial performance improved in 2017 and early 2018, and consumers will likely face smaller premium hikes and greater plan availability next year. A recent analysis suggests that rates will only rise an average of 3.3 percent in 2019, with some states like New Jersey cutting rates up to 9.3 percent. Nineteen states expect new insurers to enter the market or current insurers to expand their service areas, and no county in the country will be without an insurer.

Meanwhile, the Administration has also taken some small steps to stabilize the individual market. The Centers for Medicare and Medicaid Services (CMS) recently awarded $8.6 million to 30 states and the District of Columbia to enhance consumer protections and engage in market-stabilizing reforms. They have also thwarted several state attempts to undermine key ACA provisions and granted state innovation waivers to seven states to create reinsurance programs. It is difficult to predict, however, whether these efforts will pay off, and whether the Administration’s actions will be consistent in the future. For instance, in July, the Administration cut risk adjustment payments to insurers, and then restored them less than three weeks later.

Looking ahead to 2019

Despite evidence that the individual market is stabilizing, a lot remains uncertain. Since it is likely too soon to see the effects of the Administration’s most recent actions, much of the stabilization could be a natural market maturation following the ACA’s implementation. Some commentators have noted that the smaller premium increases actually reflect the fact that insurers overpriced their 2018 rates to account for the uncertainty of ACA repeal. Insurers are also facing their second year of outreach/enrollment funding cuts and without CSR payments. And while they have factored the elimination of the individual mandate penalty into their 2019 rates, the effects of other policy changes – like the expansion of short-term, limited duration plans and association health plans – remain to be seen.

This continued uncertainty is reflected in states’ actions to stabilize their markets. Three states and the District of Columbia have created their own individual mandates and several others have established certain protections against potential effects of non-ACA compliant plans. Most recently, a Montana health plan became the first insurer to win a case declaring the 2017 CSR cuts unlawful and will be compensated for their lost funds. States and consumers also remain concerned about losing the ACA’s protections for pre-existing conditions, especially as the Department of Justice is considering a case that could strike down key parts of the law.

2019 will be an interesting and pivotal year for the individual insurance market, and for the exchanges through which most consumers now pick their plans. Participants in the Sixth Annual Health Insurance Exchange Conference will face the consequences of these many changes and will need to navigate the exchanges through uncertain waters.