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Leavitt Partners Releases “Evaluating the Performance of State Individual Markets Using the Individual Market Effectiveness Index” White Paper

Salt Lake City, September 27, 2018 –Today, Leavitt Partners released “Evaluating the Performance of State Individual Markets Using the Individual Market Effectiveness Index,” a white paper that provides a more evidence-based approach for evaluating the performance of each state’s individual market. Since the Affordable Care Act’s passage, health care stakeholders, politicians, and consumers have scrutinized the performance of the individual insurance market. Leavitt Partners’ individual market effectiveness index (IMEI) enhances that analysis by providing more nuance and transparency into the individual insurance market in each state.

The IMEI is comprised of six measures that represent how well the market is serving both consumers and insurance carriers:

  • Consumer-focused measures: premium cost, premium increases, and payer competition
  • Insurance carrier-focused measures: medical loss ratio and per enrollee cost trend
  • Market measure: uninsured rate

Leavitt Partners used the six measures to assess state individual markets and to create an aggregate IMEI score for each state using an ideal level for each measure. The aggregate IMEI score revealed that in 2016, most states fell well short of that ideal benchmark. Two common factors among states that had better aggregate IMEI scores were the establishment of their own state marketplace and the expansion of Medicaid.

The IMEI not only provides a more robust and accurate assessment of each state’s individual market performance, but it can also lend insight into why some states’ individual markets are more stable while others are struggling. By identifying states that have higher-functioning markets, the IMEI can help inform further research into why they are performing better. Still, the authors emphasize that it is important to acknowledge that each state faces unique challenges and what works to bolster the market in one state may not work in a different state. Each state’s individual market is dynamic, and the authors believe that continued assessment of the market using the IMEI will be important for the effort to accurately understand each state’s market.

The white paper can be viewed here.