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New Wakely White Paper Sheds Light on ACA Individual Market's Future

A recent white paper authored by Wakely Consulting Group, a part of HMA Company, has released critical insights into the anticipated effects of the House budget reconciliation bill, known as H.R. 1, on the Affordable Care Act (ACA) Individual Market. This analysis specifically investigates how these changes will influence enrollment trends and premium rates.

Key Findings of the White Paper

The report, titled "Future of the Individual Market Impact of the House Reconciliation Bill and Other Changes on the ACA Individual Market," concludes that the individual market landscape could undergo substantial changes due to the proposed legislation as well as the impending expiration of enhanced premium tax credits (ePTCs).

Enrollment Projections

The analysis predicts a staggering potential decrease in enrollment ranging between 47% and 57%. This translates to an estimated loss of approximately 11.2 to 13.6 million individuals currently enrolled in the individual market. The paper emphasizes that if ePTCs are allowed to expire, combined with the enactment of H.R. 1, the individual market could shrink to its smallest size since the inception of the ACA in 2014. The report states:

"This range includes both direct effects on those receiving subsidies due to increased net premiums, and a drop in unsubsidized enrollment, which may see reductions between 3.9% and 6.1% due to soaring gross premium increases."

Impact on Non-Medicaid States

Particularly concerning are the projections for states that have not expanded Medicaid, which could experience even more dramatic enrollment declines, with estimates indicating reductions ranging from 53% to 64%. This loss of enrollment raises alarms about the stability and sustainability of the individual market moving forward.

Premium Increases

In addition to enrollment reductions, the paper indicates that the anticipated changes could result in average gross market premiums rising by 7% to 11.5%. Such increases are attributed to market attrition and the deterioration of the risk pool, which in turn would lead to higher rates of morbidity among the remaining enrollees. Wakely’s author, Michelle Anderson, commented:

"These proposed changes, coupled with the expiration of ePTCs, could cripple the individual market and drive premiums upward, making health coverage increasingly inaccessible."

Variability Across States

The report also highlights the variability of premium impacts across different states. While the national average for enrollment reduction may be drastic, some states might face declines that surpass the anticipated national averages. Likewise, premium changes in those same states could diverge significantly from the average of 7% to 11.5% increase.

Methodology

Wakely utilized a comprehensive set of methodologies, along with specialized data sourced from State-Based Marketplaces (SBM), to formulate these findings. The data analyzed covers approximately 50% of the SBM enrollment population, with a steady state effect prediction taking into account the possibility of gradual impacts stretching into 2028.

The revelations presented by Wakely's report signify a critical juncture for the ACA Individual Market as policymakers face increasingly complex decisions affecting millions. To engage further with these findings, Wakely is hosting a webinar on July 10, inviting discussions between expertise from Wakely, HMA, and Leavitt Partners regarding the future policies impacting the ACA Individual Market.

About Wakely Consulting Group

Established in 1999, Wakely Consulting Group has built a reputation for delivering expert actuarial consulting services within the healthcare sector. The company has a strong presence across the nation with nine locations and specializes in Medicare Advantage, Medicaid managed care, risk adjustment, and more. Its involvement with the ACA reflects an ongoing commitment to influencing health policy and improving healthcare access across the United States.

Find more about Wakely Consulting Group at wakely.com.

The implications of the House Reconciliation Bill’s effects on the ACA Individual Market cannot be overstated, as stakeholders brace for a more volatile and uncertain health insurance landscape.