Insurance Exchanges Offer Growth Area for Insurers, Report Finds
An estimated 12 million U.S. residents in 2014 will purchase coverage through the health insurance exchanges created by the Affordable Care Act, paying $55 billion in premiums, according to a report released Tuesday by PricewaterhouseCoopers, the AP/Sacramento Bee reports (AP/Sacramento Bee , 10/2).
Under the health reform law, 30 million uninsured U.S. residents are expected to gain access to coverage in three ways:
- The exchanges;
- Expanded employer-based coverage; and
- The Medicaid expansion.
According to the report, about 45% of those 30 million individuals will purchase coverage through the exchanges, while about one-third will be covered through the Medicaid expansion and the remaining 25% will gain coverage through their employer (Humer, Reuters, 10/2).
The report also estimates that the number of U.S. residents who obtain coverage through the exchanges will grow over time. By 2021, 29 million U.S. residents could obtain coverage through the exchanges and pay $205 billion in premiums, according to the report (AP/Sacramento Bee , 10/2).
Exchanges Represent Key Growth Area for Insurers
The exchanges represent a key source of growth for private health insurers, which have struggled to increase enrollment rates in the tough economy, the AP/Sacramento Bee reports (AP/Sacramento Bee , 10/2).
According to the report, most of the premiums will be new money, although some will represent premiums shifted from other parts of the insurance market, such as individuals switching from employer-based coverage to buying coverage through an exchange.
Researchers noted that the actual figures will depend on how many states decide to expand Medicaid coverage, after the Supreme Court ruled earlier this year that individual states could opt out of the expansion requirement in the ACA (AP/Sacramento Bee , 10/2).
Newly Insured Healthy, Could Pose Challenge for Insurers
The report predicts that health care providers will not be overwhelmed by the increase in insured individuals because 88% of the newly insured will be in relatively good health, Kaiser Health News' "Capsules" reports (Appleby, "Capsules," Kaiser Health News, 10/2).
However, the report notes that many of the newly insured will be less educated and lower income than current policy holders, according to Reuters (Reuters, 10/2). In addition, many newly insured individuals likely will not speak English, according to "Capsules" ("Capsules," Kaiser Health News, 10/2).
The report estimates that 14% of the newly insured population will hold a bachelor's degree or higher, compared with 37% of the currently insured. Meanwhile, the newly insured are expected to have a median income of about 166% of the federal poverty level, or $38,263 for a family of four, compared with a median income of 333% of the poverty level for currently insured U.S. residents.
Because of those factors, insurers could face difficulty marketing to the newly insured, Reuters reports.
Vaughn Kauffman, a principal at PwC Health Industries, said insurers likely will be forced to shift their marketing to a retail model, including using social media. Vaughn said, "What we've seen with this group ... is that most of their decisions are going to be driven based on price initially" (Reuters, 10/2).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.