The Congressional Budget Office has revised its estimates of the Affordable Care Act's costs, with results favorable to the Treasury. However, it also now predicts more premium and network turmoil.
The CBO estimates that the ACA's coverage expansions will cost the federal government $36 billion in 2014, $5 billion less than expected as recently as February, with costs through 2024 pegged at $1.38 trillion, more than $100 billion less than predicted.
The downward revisions are based in part on new exchange premium data, which upended some previous CBO models that assumed HIX plans would mirror employer-sponsored insurance in their networks and premiums.
Not quite so, CBO researchers found: "The plans being offered through exchanges in 2014 appear to have, in general, lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers' use of health care than employment-based plans do."
They are, however, skeptical that those narrow networks, provider reimbursement and premium trends will be able to continue as 20 to 25 million Americans buy exchange plans annually over the next decade.
"(M)any plans will not be able to sustain provider payment rates that are as low or networks that are as narrow as they appear to be in 2014," the CBO wrote in a report co-authored with the Joint Committee on Taxation.
Exchange plans may still be able to continue lower provider reimbursement than group commercial plans, along with tiered networks and care management, but "the differences between employment-based plans and exchange plans will narrow as exchange enrollment increases," the CBO and JCT wrote.
"That pattern will put upward pressure on exchange premiums over the next couple of years" but then hopefully stabilize after 2016, the CBO and JCT predict.
Already, it's looking like premiums for the 2015 plan year will have to rise, with underlying medical cost trends in the high single digits, according to Chris Carlson, principal and consulting actuary at Oliver Wyman. There is also the health insurance fee to factor in.
But there may still be more competition, from co-op plans that in some states have grabbed would-be HIX market share from established players, and from new entrants to exchanges, like provider-based plans or ones that sit out the first year or two.
In Maine, for instance, the non-profit insurer Harvard Pilgrim is planning to sell for the 2015 year, alongside Anthem Blue Cross and Maine Community Health Options.
With enrollment in exchanges expected to double next year just before the risk corridor program ends in 2016, one competitive strategy some see taking hold is positioning next to the lowest rates.