The Patient Protection and Affordable Care Act opened up thepossibility of buying health insurance to millions of Americanswho, for whatever reason, were uninsured before—to the tune of 8million enrollees in PPACA health exchange plans as of earlyMay.

However, some of those 8 million new policy owners were no doubtenrolled previously in a different plan, whether employer-based orindividually bought.

Many of the largest health insurance carriers began offeringplans on the state and federal health exchanges, but not all ofthem chose to provide an exchange option. And there's a lot ofuncertainty surrounding the effects of the PPACA exchanges onhealth insurance carriers that have traditionally offeredstand-alone individual or family insurance plans. Are individualsand families still purchasing these plans directly from the healthinsurance carriers? What's happening to the plan rates? And willhealth insurance carriers continue to offer individual or familyplans?

For the past decade or so, about 10 to 15 million people eachyear have bought their own health insurance.

“They're not the same people from year to year,” explains AdamBeck, assistant professor of health insurance, Huebner School, TheAmerican College. “So with 8 million enrollees, what we have now isan entire individual market that has been replaced in the past sixmonths by what people call Obamacare. About 60 percent of that isthrough the online exchanges, and I think that proportion is goingto grow.

“Off the exchanges, consumers looking to enroll in healthinsurance through the individual market were definitelyexperiencing rate increases after the requirements of PPACA tookeffect this year,” Beck adds. “Some increase was to be expected,but the 2014 rate hikes have been more noticeable because of theelimination of medical underwriting and the requirement to cover 10essential health benefits.”

A growing number

What was really surprising, according to Beck, was the number ofconsumers who signed up for qualified health plans (plansincorporating certain essential health-benefit mandates from thePPACA) off the exchanges.

“Estimates put that number in the millions,” Beck says. “Butvery few people will be doing that in the future. Confidence in theexchange websites will grow; more people will be aware that theyqualify for tax credits; and the individual market will beconducted almost exclusively through the online healthexchanges.”

And Beck believes that, based on the new enrollment numbers, theevidence is good the rate of premium increases will slow. “Healthy,young people signed up on the exchanges, so we're getting plansthat insurers are pricing lower than they even expected,” hesays.

“With experienced carriers, I don't think you'll see a big jumpin rates unless the carrier didn't price things correctly,” saysSusan Combs, PPACA, president, Combs & Co. “Most of them havepriced themselves accordingly. We've actually been told by acarrier in the New York market that they'll be seeing a decrease intheir rates for the first quarter of 2015. The system entirelychanged for so many states this year because they had to do awaywith underwriting based on health, so I don't think you'll ever seeas big an increase as you'll see this year unless you do not getthe young, healthy people in the mix that all the carriers areplanning on. They're needed to basically be paying on the claimsfor the higher utilizers.

“Most of the carriers understand how the system works,” sheadds. “It's the newer carriers that don't have any experience orhistory with claims that are going to be the ones with somesignificant increases, because they don't have any history, and Ithink a lot of them were 'buying' the business.”

“It's still unclear for next year whether or not the actuarialdata will provide enough insight so that the cost structure willchange,” notes Minda Wilson, founder, Affordable Healthcare Review.“We don't know how many of these people are going to pay for theirpolicies the whole year. We don't know what the usage of thesepolicies will be. We don't know what deductibles are going to be,either. It's not just the cost of the policy premium; you mustconsider the cost of the deductibles and the co-pays as well.There's also uncertainty about who's going to renew.”

“The other thing that's happening on the private market ispeople are starting to form organizations to buy collective healthcare,” Wilson continues. “Private trade associations and otherorganizations are buying health care for their members, and peopleare signing up because it's cheaper. The bottom line is that theexchange, going forward, is still going to have the most expensivepolicies because people with other, less expensive options aregoing to take those options.”

Status quo?

Frank Bird, vice president of MDS Consulting, doesn't think theindustry will see any large increases or decreases in the comingyear.

“I think people are positioning themselves strategically forwhere they want to put their efforts,” Bird says. “The carriers arereally looking for predictability, and there isn't much of that inthe exchanges right now.”

However, he thinks that over time, the rate of growth forinsurance premiums will remain lower than in the past as theintegration trend in health care continues.

“As more and more systems become integrated from a clinical andtechnical standpoint, they'll apply managed-care principles acrossthe board,” he says. “So you should see—even if it's not negotiatedrates—utilization going down a bit as more and more people are onmanaged-care plans, regardless of which provider they see.”

And Bird sees more attention paid to self-funded plans, too.

“It's really every employer figuring out what's most important,”he explains. “Is it cost? Return-to-work speed? A certain altruismabout whether employees are happy? Everyone has to make thatdecision, and we have to get away from health care as acommodity.”

Empowering roles

Bird also says the existence of the health insurance exchangesas a whole could lead to a more educated patient population—andthat could help drive the national cost of health care down.

“The exchange is going to educate people,” he notes, “and oncethey're educated, the offerings from health plans to supportmembers are going to be broader. This is definitely going to changethe game, and I think it's a change for the good, because plans aregoing to have to focus on individuals, not just pricing.”

The same goes for brokers and agents, who, Beck says, will“continue to play a significant role in helping people purchasehealth insurance policies.” Still, he says, the platform will bealmost exclusively online with the exchanges.

“I think there's a natural concern that if you are a healthinsurance agent or broker that you're going to go the way of atravel agent,” he continues. “But there is a significant differencebetween buying health insurance and buying a plane ticket. If youhave complex health needs, you probably should still be talkingwith a broker who understands the plans and the networks. There aregoing to be significant opportunities for consulting in the future.Brokers will have a role in long-term strategic planning, settingup self-funded plans with employers; they're going to be workingwith employers to set up wellness programs, some of which PPACAincentivizes to manage their risks and reduce their costs.”