Jennifer Colamonico
Welcome to Vital Viewpoints on Healthcare, where we dig into the trends, policies and people that are changing how health care works for all of us. In today's episode, we are diving into the Affordable Care Act. At a time when markets are volatile, coverage is changing, and timing has never been more critical. Our guest is Michelle Anderson. Michelle is the director and senior consulting actuary with Wakely Consulting Group.
Wakely is an HMA company. Since joining weekly in 2014, Michelle has worked with commercial insurers across the country on everything from plan design and rate filings to financial modeling provider contracting market research. All of this with a keen eye on ACA pricing and strategy. She is also supported Medicare Advantage bid submissions, bringing a depth of experience that spans both the commercial and government payer space with her actuarial expertise and data driven insights.
Michelle is uniquely positioned to help us understand how the ACA marketplace has evolved since its early days and what today's individual market looks like, where opportunities lie for innovation and sustainability in the future. Michelle, thank you for joining us today.
Michelle Anderson
Thank you for having me.
Jennifer Colamonico
So, as, as we were preparing for this conversation, you mentioned that you joined weekly around the same time as the ACA kind of got off the ground. So you sort of professionally have grown up in and around this marketplace. And obviously more than ten years later, the market is more mature, but it's quite different from when it launched.
So when you think about the course of your career, what are some of the most significant changes that you've seen in the ACA marketplace over the past decade? And, and sort of how has it affected the way that we think about individual insurance coverage?
Michelle Anderson
So I think one thing that's really been a concern in the individual market is that it is always changing. So we are really not usually in a stable world. And, you know, even looking at this year, it's, you know, going into 2026, year 12 of individual market coverage and there is more uncertainty than maybe we have ever had.
Despite the 12 years that certain plans have been operating in the space. So, you know, of course, the very beginning, the first three years, there were a lot of unknowns, a lot of mispricing, a lot of the collapse were entering and didn't make it. And a lot of that was due to the three year. So the reinsurance, the risk corridor and risk adjustment, which continued.
But you know, with the risk corridor payment, a lot of plans were really kind of banking on those. And when the funding wasn't there, that really caused a lot of instability in the market. And so, you know, the next few years after that, there was a lot of change as far as significant rate changes, a lot of carriers exiting.
You know, with that rate correction, it's sort of become an attractive market again. Are there carriers wanting to come back in? And then of course, you know, end of 2017 we had another big change where the cost share reductions were no longer going to be funded by the government. So this happened, you know, after plans had already put in their premium rate and couldn't really turn back on that.
So over the next couple of years, it was really, you know, everything was changing in the landscape, figuring out how to adapt to that. And then as everything appeared to maybe be stable, we got into the world of Covid. And then, of course, enhanced subsidies started in 2021. And that's really been a continuation that has caused the market to, you know, more than double since they were put into place.
And, and since then we've had Medicaid free termination and, you know, a lot of other regulatory changes that every year there's a little bit of a pivot. But, you know, probably over the last three years, there's been more in flux. And then, of course, with enhanced subsidies maybe expiring and all the other regulatory changes, it's another animal to try to handle.
Jennifer Colamonico
So it seems like the only certainty has been uncertainty. What do you think? You know, do you think that's why the marketplace has survived? Because, I mean, to be in it, you got to be adaptable, right? Because it's it hasn't been straightforward at all since the beginning.
Michelle Anderson
Yes. I think carriers have learned to adapt. I think that states have learned to adapt. There's been additional innovation to really try to figure out ways to make the marketplace more affordable. Or more access gives consumers more choice. So there's, you know, 1332 waivers. That really helps with a lot of the innovation. But I, I think over time, you know, carriers have gotten pretty sophisticated with being more proactive rather than reactive to try to operate in this ever changing environment.
Jennifer Colamonico
To talk about affordability. I mean, it seems to me that, you know, I mean, listen, the whole ACA market was really created because the individual market originally was very expensive. Right. And so we through this, you know, big process and subsidies and so forth, made coverage more affordable and yet you still hear it's expensive, right? So, how are our carriers thinking about affordability right now?
With regards to, you know, maintaining, I guess, consumer demand, if you will, even those subsidies are likely to go away. I mean, how are we going to tackle affordability in these changing circumstances?
Michelle Anderson
It's a good question. And, you know, just as we think about the subsidies they impact, you know, the lower income population. And so there's kind of different cohorts and it's a complicated formula. Right. It's going to vary depending on your age and what region you're in and what your income level is. And then you have to consider what your health status is.
Right. Like you can really get into the weeds, but there's a population that you know, doesn't receive subsidies and never have. And one thing that you know, has been talked about a lot coming up is how in 2026, the market is changing significantly. There's a lot of significant rate changes in the double digits that are more than double what we've seen in the past two years.
Members that do not receive any subsidies, they are not isolated from any of those premium rate changes. So when you see a carrier that has a 40% rate increase, a lot of consumers are going to seal that. And that is a separate topic. Then all these regulatory changes with the enhanced subsidies going into subsidies. So that's going to impact a lot of the lower income numbers.
And you know, there there's a large proportion of people right now that pay under $10 a month from a net premium perspective, and that is going to significantly increase. So take to keep things affordable. The reality is a lot of consumers will have a hard choice. So it's not going to be affordable for everyone. Unfortunately, a lot of those $0 are going to turn into maybe $40, maybe $50.
It kind of depends. So some people may end up leaving, or there are trade offs where consumers could buy a a less generous or a cheaper plan. So they'll save on premium cost, but then they're at risk for additional cost sharing. So maybe they're healthy and that's fine. But there's still the risk of unexpected costs, or maybe even certain consumers will forgo care.
So I think there's ways where we can try to educate brokers, educate members on how to buy a plan. But the reality is the affordability will be not as good as it is with the enhanced subsidies to
Jennifer Colamonico
And as an actuary, you specialize in turning data into insights is, as we sort of said in the introduction. Yeah, if we think about, you know, the amount of data that we've collected over the past ten plus years of, you know, who is in this marketplace, you know, what have we learned about them? How are marketplace, consumers different than, you know, employer consumers?
And what is it that these plans kind of need to deliver? You know, in terms of access to care.
Michelle Anderson
We are fortunate in that we have access to a national ACA database that has detail at the member level across the country. And so we analyze multiple years of data to try to understand and these questions and understand what does drive member choice consumer patterns. Where do we see good behavior. Right. So is there a particular plan design that drives a member to actually go into the doctor?
How does that change based off of their income level. So no lower income members of course are extremely price sensitive. And so how do you tailor a benefit design to make sure that there are less barriers for certain jobs, for getting preventive services, for getting into the doctor for that that initial visit is really important. So we're able to look at that and really use that to work with carriers and states to develop, insight and strategies.
So not only do we work with insurers to also develop these plan designs, but with many state data wise and, and the government, have come up with certain standardized plan designs or innovative waivers as well.
Jennifer Colamonico
So let's talk a little bit about timing. We're having this conversation in mid September 2025. As of right now. This the subsidies are being allowed to expire. Those enhanced subsidies that had been put forth, during kind of the Covid period. So as you mentioned, there will be a loss of subsidies. Congress may or may not take action between now and the end of the year.
So depending on when somebody's listening to this, the circumstances might be different. But talk about the timing of like how quickly does that hit, consumers, how quickly, you know, are people going into open enrollment now without the subsidies? And does that change affect people's choices this year? Like how quickly do these changes take place?
Michelle Anderson
In reality, they're going to take place right away when when a member goes to sign up for open enrollment, if they are being active in that decision, they are going to see a different cost based off of their income level. Now, there's also a purpose members that are passive enrollees. And so they might be auto enrolled, for example.
And so they might not know until a few weeks in. And they might get a letter, for example, that tells them that they are going to have maybe a $30 premium instead of it being a free plan in which case they may decide not to enroll. I think why, you know, as we talk about timing, timing is really still complicated because we're not sure what's going to happen with the enhanced subsidies.
I mean, every day there's more news coming out. And so there's still a situation in which something is reversed. So either enhanced subsidies continue or there's some version of a subsidy that continues in that timing. I, I mean, there could be something by the end of this month, but also there's a discussion about something even happening during the open enrollment period in December and which then, you know, there's a lot of other questions that are operation all.
And how states and carriers actually handle that. So, you know, in a world where everything continues as it is an enhanced subsidies to expire, you're going to have a lot of people that that opt out or going into early next year as well. I think that's where you're going to see a lot of people that are enrolled drop out or not, ultimately pay a premium.
And so you'll see probably really big shakeups by around like April or May of next year once that's kind of slowly come to fruition and settle down a little bit.
Jennifer Colamonico
So that will look like people enroll and then they drop coverage because they can drop any time, right? So if they say, oh, this is way more than I thought I was paying and I can't afford this. And so you'll see a potential coverage drops in the first quarter.
Michelle Anderson
Yeah. And some people may actively drop coverage or they may just not pay their premium. And there is a grace period essentially. And so certain lower income members are allowed three months of not paying their premium until they are not actually as actuated as what they call it. So fluctuation essentially means that you go in there and you actively pay.
So a lot of people right now, if they're paying $0, they don't actually have to pay anything. So they're always effectuated. And so there's there's a big group of people that will probably fall into that camp of just, you know, they passively won't do anything and then they, they won't pay their premium and they'll be just enrolled.
Jennifer Colamonico
So it looks like people will have some big potential for disruption early next year.
Michelle Anderson
Yeah. And, you know, there could be a lot of people that at the end of the open enrollment period that they will decide to like change carriers, for example. So it depends how sophisticated the marketplace is and how good the education and the broker reach out is to educate people, because they could buy down to the cheapest carrier, they could buy down to a bronze model level staring at gold.
And maybe that's the best choice for them rather than dropping coverage. Because once you get out of that open enrollment period, you're kind of stopped. So there are a lot of ways to be proactive and communicate with members to make smarter shopping decisions, frankly.
Jennifer Colamonico
Yeah. So basically what you're saying is if you know, this is going on or somebody tells you this is going on, you make a different choice during open enrollment, then that's fine. But if you don't and I mean, I guess I'm, I'm how many people typically just kind of go into auto enrollment to the next year, like what percentage of people are actively re shopping and during open enrollment?
Michelle Anderson
I want to say it's 35 to 40%. It's been increasing year over year because of like every there's different rules around auto enrollment. And it's not like the same rule across the country. Different states, different marketplaces do it differently. But because of some of the like changes, there has been a lot more people with $0 premium plans.
For example. So they get to stay there. There are complications too. When the carrier who the lowest cost or the benchmark changes in a market. So when we look at what's happening in 2026 where like certain carriers having 10% rate changes, some carriers having 40%, there's so much churn in the position of where carriers are at that then that that will cause less people to be able to be auto enrolled.
They're going to have to actively sign up. And then when that as well, if they're a lower income, verify their income. And there's just, it's more of a burden now. There's more operational, processes that that carriers and, and members actually have to go through.
Jennifer Colamonico
Okay. Thinking about the individual market more broadly, I my hypothesis is that sort of the majority of the individual market is now ACA plans, you know, federal, state, across the country. Is that accurate? But do you have a sense of how many, like what size of the individual market, what portion of that is our ACA marketplace plans?
Michelle Anderson
I think the ACA market is the majority. A lot of the old pre ACA plans are shrinking or are no longer. Or there's been additional regulatory constraints on that. And so people are not. And then there is a I mean I don't even know if I'd call this individual. But like short term limited duration plans. Right. They're they're not a replacement for individual ACA coverage, but it's another mechanism that, you know, people who are younger, healthier, may or may opt in, instead of enrolling in ACA coverage as an alternative to being uninsured.
Jennifer Colamonico
And are those I mean, are those high deductible, like, I mean, they're short term, which depending on how we define short term, right? It's either six months or 12 months. But do they are they essentially like catastrophic plans?
Michelle Anderson
It's all on the fine premium. But I think generally they're not going to really cover you in the event that anything significant happens. It would essentially be like not having insurance. And so it's really not great protection for people. There's a lot of regulatory concerns or a push on, you know, marketing, short term limited duration plans a certain way, I guess.
Jennifer Colamonico
What other ideas are there out there for? You know, it seems like this individual market has been, as I said earlier, it seems to be kind of a, a challenge, do I dare say dysfunction for a long time. Right. It's, you know, meeting the needs of, of ever increasingly expensive cost of care for a population that does not have the benefit of spreading risk.
You know, like, what are the options at this point if the ACA marketplace has become such, kind of a political football that it's just changing so much that it doesn't stay stable, you know, what is the answer for folks that find themselves without coverage?
Michelle Anderson
I don't know if I love the answer to that because I, you know, I, I don't know if there is, at this point in time, an alternative solution. I mean, some people might have the benefit of enrolling back on ESG coverage, for example. But I think there is a a population or a cohort of individuals that will not be eligible or find coverage affordable.
And so I think we're kind of in a world where, absent any regulatory impact or any change, I think there's just going to be a larger population that is forgoing coverage. And then, you know, there's a lot of other consequences that come with that.
Jennifer Colamonico
So it pretty much has to stay within the realm of kind of a regulated marketplace. At some point. We know that the subsidies were, you know, a political swing, in one direction to get rid of those swinging back in the other direction. You know, but I mean, do you think that the ACA marketplace goes away or does it just continue to, kind of blow with the winds and find its footing?
Michelle Anderson
Million dollar question. Well, if I've learned anything from this last year, no one really knows. Because every time we try to predict something, something else comes up. But, you know, a lot of the reversals that are happening right now with the regulatory changes, a number of them are kind of just rolling back, was what was put into place over the last few years under the initial Biden error, with some of the enhanced subsidies that came in in 2021, so many of them are kind of reverting back to like, you know, beginning of ACA world.
So if we're dealing with what we have in front of us now, it doesn't go away. It continues on. It's just a lot smaller. It just looks a lot different. I think just the question is, what happens in the future? What else is going to be, you know, put out there from a regulatory standpoint?
Jennifer Colamonico
Yeah. That's a good that's a good reminder, the enhanced subsidies have gone away. Right. But not all subsidies. So.
Michelle Anderson
Right.
Jennifer Colamonico
Or to frame that correctly.
Michelle Anderson
Exactly. So it's really just, you know, what was in place pre 2021 time frame when that hit. Yeah.
Jennifer Colamonico
Well and everything I know everything we all know about health insurance. Right. That it depends on what is covered as to how expensive it is and what your premiums look like. So if this, you know, one solution to deal with affordability is to subsidize it. Another solution would be to scale back what's covered. So how do you I mean, do you think that this creates an opportunity for like lower actuarial value plans to kind of come back?
Obviously, that wasn't the original intent of the ACA. There was that sort of minimum essential benefit. But, do you see that as being a potential or I guess maybe like, yeah. Do you see that as being a potential pathway to retain coverage, but, you know, at a more affordable rate?
Michelle Anderson
Yeah, I think it'll flow back that way. So even if you look at public data that does show plan selections over time, in earlier years there were a lot more members that were in the bronze plans, for example. Now that has shifted in a lot of states, and there's a huge population that's in gold, for example. So I do think that we're going to see a little bit of a reversal of members deciding to buy down to that cheaper coverage.
There is also a regulation change related to catastrophic plans as well. That opens up essentially to consumers to purchase that. So that's another question. As you know, that's pretty recent if that's going to cause any spike in enrollment on those plans.
Jennifer Colamonico
So then how do you reconcile that, like thinking, you know, just beyond the beyond the ACA, not only in the ACA, obviously, there's a lot of other high cost therapies, high cost procedures, things, you know, innovations, GLP ones, etc., things that are driving costs and have, you know, I guess, aspirations to lower overall cost of care still kind of figuring out the data on that.
But, you know, even employer sponsored plans are struggling with how to pay for these things. So, you know, how are you, talking to clients, to plans about managing these high cost, drugs and therapies at a time when the pressure is kind of on, on, on, lower, lowering coverage to, to make these plans affordable.
Michelle Anderson
If we're talking about specific drugs, it really comes down to formulary. So I think there's certain strategies around what drugs you cover, where you place them. And the regulatory environment is a little bit different on ACA plans compared to like Medicare, for example. And so that, you know, some pressures across, you know, all lines of business might not hit ACA quite the same.
One benefit maybe we've been talking about a lot of headwinds here. So maybe it's good to throw in a silver lining. But health plans are thinking about it is trying to adjust for some of the cost pressures. And so of course, if you are not eligible for subsidies that that is a negative to your an individual that is eligible for subsidies, you are kind of isolated from those cost increases, which is a higher majority of the market.
And so with the kind of the resetting of cost, to help pay for some of the management, right. It's giving a rate correction. Right, which is possible in certain markets in the ACA. That might make it a little bit more stable and sustainable in the long run. But as far as other trends, other headwinds, I think there's this other conversation around rating with providers on contract rates or trying to invest in certain programs to help with medical cost management.
You know, this is not a new idea. This has been happening. But I think just across the industry, there's a lot of concern about this. And so people are really putting a lot of energy into these specific initiatives.
Jennifer Colamonico
How does this all square against, you know, larger demographic trends and trends? You know, in this particular economic moment where we have, and, you know, potential coverage losses for a bunch of different reasons, right? We have some Medicaid changes. We have, you know, unemployment rates in certain sectors. And sort of things like, like, for example, that I, you know, is going to disrupt white collar jobs, which tend to be more highly insured.
So you could be looking at a very different, you know, mix of potential beneficiaries for ACA plans as more people are kind of finding themselves without coverage and having to find their way through the individual market, which I would assume, again, argues for, for some of those bronze plans, but not necessarily.
Right, people coming off of higher wage jobs. So, how are you advising clients in terms of, you know, longer term changes in, in demand and, and changes in potential, beneficiaries?
Michelle Anderson
Again, a lot of uncertainties. But, you know, of course, depending on what happens with Medicaid, that's really going to impact what happens in the ACA market and who may or may not be eligible. From that standpoint. And so I think it just goes back to what we talked about at the beginning of being flexible. I think none of us really know what's going to happen, but start, you know, just monitor all the regulatory changes and, and have that top of mind to figure out how to pivot as things come through.
Jennifer Colamonico
Let me ask you our sort of signature question here. If you had a magic wand and you could wield it, to, you know, improve the stability, improve the ACA market, how would you wield that wand?
Michelle Anderson
Well, I think my plan today would be to continue enhanced subsidies because that seems to be the best option for the majority of consumers. With, going away, there's just a lot of market instability, which in turn, you know, it's impacting affordability. A lot of members will go uninsured. It's going to cause certain carriers to have financial strain.
Michelle Anderson
And all these changes are hard, especially when they're unpredictable. And there's really not a clear timeline ahead of us. So, maybe I'm in rates filing fatigue. As you know, I'm on the 10th round, still trying to understand the regulatory environment, but I, I think that would be one thing that would would really is a lot of concern for many consumers.
Jennifer Colamonico
Well, and it's interesting it's a, it's a straightforward answer, but and may require considerable political magic to, to achieve it. But the fact that, you know, it is squarely on the table, says that, you know, I don't think you're wrong about, that being a critical factor to this marketplace working. And, you know, there's kind of an old adage in public policy programs that, you know, once you give somebody a benefit, it's hard to take it away.
And so this is an interesting experiment. So, you know, again, here we are in September, probably in December, we may have a lot more information that may swing this one way or the other. But, certainly is, demonstrable proof that subsidies do make a difference there. So.
Michelle Anderson
Yeah.
Jennifer Colamonico
Is there, I guess just in closing, is there is there anything that you think more, you wish more people would know about the ACA market, or you think it would really kind of enhance people's understanding or something? You talk about it. Dinner parties when people ask you what you do, what do people most misunderstand about the ACA market?
Michelle Anderson
Yeah, I think no one at dinner parties like, what is it if it's okay? I mean, it's not like my answer.
Jennifer Colamonico
Probably the good takeaway. It is so interesting to me that for, what is it, 6% or whatever it is of our overall coverage that it has, you know, had regularly 80% of the media coverage of have sort of health policy over, over the past ten years. And, you know, compared to the bigger employer market and Medicare and just the sheer volume of people that are in both of those markets, it's just so interesting that this little, small and unwieldy little market has gotten so much, political and media attention.
Michelle Anderson
Yeah. I mean, anyone I do know that is enrolled in individual coverage is shocked by what it's about to happen. And I have heard from many of those people that they probably will just choose to not buy the insurance. So it's kind of, you know, as I go through my actuarial modeling and I'm estimating how many people will opt out and not not buy coverage and go uninsured because it's it's unaffordable.
I mean, I think it's kind of a living example when I hear that coming out of people that I know, they're the folks that are going to choose not to buy it.
Jennifer Colamonico
Yes. Sadly, I think you are correct. My anecdotes would tell me the same, but, the one thing we know is that we will continue to be talking about this and, it will continue to swirl. So we appreciate your time today and your insights into this market. And, it's good to have you with us.
Michelle Anderson
Thank you for having me. Thank you.
Jennifer Colamonico
This episode of Vital Viewpoints on Healthcare is sponsored by HMA Information Services. HMAIS is a subscription based service that provides state level data on publicly sponsored programs like Medicaid from the latest managed care enrollment, market share, and financial performance data to up to date RFP calendars and state by state overviews, HMAIS has all the information you'll need to power your initiatives to success.
This podcast was produced by myself, Jennifer Colamonico along with Tiffany McKenzie in collaboration with our guests. The content is the property of Health Management Associates.
