Market Stabilization 

Learn more about why we advocate for individual health insurance market stabilization, including the solutions we endorse and current legislative trends. 

The Issue

  • While the majority of our health care system is stable, more must be done to protect people with pre-existing conditions like arthritis in the individual insurance market.
  • Since 2013, many state exchange marketplaces have seen premiums increase over time. Patients have also seen increasing out of pocket costs. Insurance providers (insurers) have made these changes in large part because healthier individuals have chosen not to enroll in plans offered on the marketplace. 
  • In addition, the federal government decided to end payments that compensate insurers for covering individuals that use more health care services. 
  • Short-term Limited Duration Health Plans – Short-term, limited duration (STLD) health plans offer less coverage than a typical comprehensive health plan and only provide coverage for a limited amount of time. As a result of the limited coverage, these plans can leave patients without insurance for major medical expenses like prescription drugs and hospital care. These plans are exempt from Affordable Care Act (ACA) protections against discrimination on the basis of pre-existing conditions (such as arthritis) and may exclude coverage for expenses as a result of that condition.
  • Association Health Plans – A 2018 regulation from the federal government provided additional flexibility to associations and small employers so they could sell plans that are exempt from many ACA protections. These plans cannot discriminate against individuals with a pre-existing condition; however, they can vary premiums based on age, gender, or a patient’s geographic location. Historically, these types of plans have been found to be deceptively marketed and increased risk of insolvency.
  • State-Based Individual Mandate - In November 2017, with the passage of tax reform legislation, Congress repealed the tax penalty for not having health insurance. Without a federal requirement that individuals maintain health insurance, people will likely delay signing up for insurance until they need it. If healthy individuals do not participate in the marketplace, insurers will compensate by raising premiums and making health care coverage unaffordable for Americans who do not qualify for tax subsidies.
  • Section 1332 Innovation Waivers - Section 1332 of the ACA permits states with unaffordable or few insurance options sold on their marketplaces to experiment with innovative ways to deliver health insurance to individuals so long as certain guardrails are in place.

The Solution

  • Increased transparency for short-term plans and association health plans, a healthy risk pool, and the introduction of reinsurance programs to help insurers cover claims for high-cost patients.
  • Short-Term, Limited Duration Health Plans – Require clear transparency from plans on what benefits are covered and are not covered, especially prescription drug coverage. Limit the availability of short-term plans or limit contract duration and restrict how often they can be renewed. These important protections will help ensure that STLD plans remain available as transitional, limited coverage options for people between jobs or in other extenuating circumstances, while also making clear that these plans do not constitute true health care coverage.
  • Association Health Plans – Require association health plans to meet the same requirements for covering the ACA’s essential health benefits and other important patient protections. Require transparency from plans on what benefits are covered.
  • State Based Individual Mandate – To lower premiums and out of pocket costs, encourage states to enact their own individual mandate that requires everyone to participate in the marketplace or pay a tax penalty or fine. Studies show that states with marketplaces that have participation from those with low health care needs often have lower premiums and out of pocket costs.
  • Section 1332 Innovation Waivers – Encourage states to address rising premiums in their marketplaces by creating a state reinsurance program. A reinsurance program provides payments to insurers to help pay claims for high-cost enrollees. From Alaska to Maine, states have found success in balancing their insurance markets by creating reinsurance programs. These payments are made after an insurer’s costs are unexpectedly higher than anticipated.  

Current Trends

  • Congress is considering legislation that would nullify recent federal regulations that expanded short-term, limited duration health plans (H.R. 1010). 
  • A recent court ruling in March 2019 questioned the expansion of association health plans by the federal government. The court directed the Department of Labor to revise the regulation to satisfy the court's ruling. It is likely the ruling will be appealed. 
  • Some states are considering state wide individual mandates; California is the only state, to date, that has enacted such legislation.
  • Seven (7) states have approved Section 1332 Innovation Waivers by the federal government. Several additional states have draft waivers under review. 


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