2024 marks the 10th year ACA exchange plans are available to individuals. Enhanced government subsidies have prompted more people to enroll, and some payers are hoping more small- and medium-sized employers will opt to send their employees to the individual market.
Here are three key questions for the next decade of the individual market:
What is the future of ACA subsidies?
Enhanced subsidies have spurred record-enrollment in the marketplace. The subsidies provide enhanced tax credits to individuals with incomes up to 400% of the federal poverty level. The enhanced credits were signed into law in 2020, and later extended through the end of 2025.
The increased assistance nearly doubled enrollment in the marketplace, from 12 million enrollees in 2021 to 21.4 million in 2024. In October 2023, Centene CEO Sarah London said the company saw its marketplace enrollment grow by 75% year over year.
Though subsidies have drawn increased enrollment to the market, their future is unclear. If the subsidies expire, the Congressional Budget Office projects subsidized marketplace enrollment will shrink to 16 million in 2026, and further contract to 14 million though 2024.
Payer executives have told investors they are optimistic Congress will cut a deal to extend the subsidies, or make them permanent. In October 2023, Ms. London said the extension of the subsidies was a signal "that the repeal and replace, the debate going on between Republicans and Democrats to try to pull back the Affordable Care Act, has died."
"Essentially, everybody believes the marketplace is here to stay," Ms. London said in October 2023.
How big can ICHRA grow ?
Payers are hoping to bring more people who would receive coverage through an employer into the individual market.
Individual coverage health reimbursement arrangements, or ICHRA, allow employers to contribute toward the cost of plans employees buy on the individual market. HHS first introduced the option in 2019, and expects more than 11 million employees will eventually be enrolled.
The option offers employers struggling with rising healthcare costs a chance to shift the burden of cost management from employer to employee, Scott Ellsworth, a consultant and former health insurance executive wrote for Becker's in April.
"[ICHRA] is the final step in the transition of employee benefits from an employer-sponsored action to an employee-driven decision, not dissimilar to what occurred with retirement planning and the phasing out of traditional pension plans in favor of employee-driven, -owned and -controlled 401(k) plans," Mr. Ellsworth wrote.
Some insurers see ICHRA as a major area of opportunity. Mark Bertolini, CEO of Oscar Health, said ICHRA offers the company the opportunity to "create a whole new market."
"Our view is, how can we get more people into an individual market, not necessarily only through the ACA? That's the big part of our strategy: going after the 71 million lives that are in small group and middle market employers," Mr. Bertolini told CNBC in June.
Oscar Health plans to wind down its small group offering, Cigna + Oscar, at the end of 2024. Mr. Bertolini told investors the company believes ICHRA is the solution for small and middle-sized employers, rather than small group plans offered on the exchange.
What does this mean for providers?
If the ICHRA market takes off, providers should take notice, Mr. Ellsworth wrote.
Payers could pressure providers for "deep discounts" to support their individual market growth goals, according to Mr. Ellsworth. Providers should develop a strategy now, and could consider limiting the number of [individual] plans they contract with.
"Providers need to learn from the past and lessons from the impact of reimbursement cuts in Medicare Advantage. Providers need to have a robust strategy around HIX contracting and be very selective on who they contract with and at what rates," he wrote.