Employee Benefits: What Businesses Should Know About the Individual Market

Abir Sen is co-founder and CEO at Gravie where he focuses on making sure we’re well positioned and fully equipped to meet the needs of our members. 

This is certainly an interesting time to be in the healthcare business. In terms of heated political rhetoric, it is hard to top what has been happening. Every day seems to bring yet another sensationalistic headline, and every week there is a new twist to the legislative and regulatory process unfolding before us. I thought this would be a good opportunity to provide insight on the three questions I get asked most often.

1. Is the individual health insurance market stable?

There is no doubt that the individual market is going through a time of change. Legacy players are trying (and sometimes failing) to adjust to a new model of designing, pricing and marketing products to customers. New entrants, often backed by deep-pocketed venture capitalists, are entering the market and trying to win market share. The recently released information below, provides clarity amidst all the noise:

• In analyzing the effects of the AHCA (the Obamacare repeal/replace legislation) the nonpartisan Congressional Budget Office, in a report released in March 2017, said the individual health-insurance marketplace under both the current system and the proposed system would be stable, mostly because both laws retained tax credits that would subsidize health insurance for a large number of people. That report can be found here. 

• There has been a lot of talk of whether some markets are in a “death spiral” (insurance-speak for when higher premiums cause the healthier people to drop out of the market, driving up premiums even more, and so on). However, a recently published report from the respected Brookings Institution refutes these claims. The report found that even though premiums in many state-based individual markets increased from 2016 to 2017, there wasn’t a proportional decrease in enrollments. This report can be found here.

2.  What roles do regulators play in stabilizing the markets?  

So it seems that all the discussion of the implosion of Obamacare is overstated. This is not to minimize, however, the crucial role regulators play in stabilizing the markets. At the national level, the Trump administration needs to assure insurers that they will continue to make the payments that the ACA requires them to make (they have said that they will continue to make the payments this year, but haven’t given long term assurances). At the state level, regulators and insurance commissioners need to take actions that will increase confidence in their local markets. The Minnesota state legislature, for example, recently passed a bill that provides $543 million in reinsurance to stabilize the individual market.

3. How does all this affect Gravie?

At Gravie, we live by the belief that a defined contribution approach – where the employer gives money to their employees and allows them to choose their own benefits – is far superior to the traditional, one-size-fits-all approach. We are not, however, ideologically married to the type of insurance products the consumer should buy with that money. In most situations, a policy from the individual market makes sense for the consumer. Starting last year, however, we added small group products to our marketplace so the employer/employee can opt for those if it happens to make more sense for them.

We will continue to add products and services to our market place that ensure employers and their employees are getting the best deal possible. In addition, as the legislative and compliance landscape zigs and zags, we are able to offer our employer customers the assurance that we will continue to keep them compliant with the requirements of the law, so that’s one less thing they have to worry about.

If you’re interested in learning more about Gravie, contact us today.