ACA exchanges in 2018: Less competition, higher premiums

Open enrollment for Healthcare.gov plans begins Nov. 1.

With open enrollment less than a week away, newly released research makes it clear that 2018 will be a year unlike any other for the Affordable Care Act marketplaces. 

For one, the percentage of counties with only one on-exchange insurance carrier increased from about one-third in 2017 to close to 50% for 2018, according to an analysis by Kathy Hempstead, Ph.D., a senior adviser at the Robert Wood Johnson Foundation.

Driving that trend is the fact that there were about 1,500 county-level marketplace exits by insurers for 2018, compared to about 200 entries. All told, about a fourth of the U.S. population lives in a county that will be served by just one carrier next year.

Looking at it another way, about 40% of states will have as much or more insurer participation on the exchanges as they did in 2017. The rest will lose least one carrier.

One fate that the individual marketplaces have avoided, though, is having any “bare spots” next year—in other words, no U.S. counties will be without an on-exchange carrier. At various points earlier in the year, as many as 82 counties were projected to be without an exchange option, but insurers have since stepped in to fill in the gaps.

RELATED: Even amid political turmoil, 2017 is shaping up to be good year for individual market insurers

Other than dwindling competition, another issue facing the ACA exchanges next year is rising premiums.

Many insurers requested hefty premium hikes for their individual market plans in 2018, in part to prepare for the possibility that they might stop receiving government reimbursement for cost-sharing reduction payments. The Trump administration made good on that threat earlier this month by deciding to cut off CSR funding, and a bipartisan bill aiming to provide stopgap funding for the subsidies has stalled.  

Now, it’s becoming clearer what the final rates will look like for ACA exchange plans. In a new analysis of filings from Healthcare.gov states, the consulting firm Avalere found that premiums for silver plans—the most popular metal level—will rise by an average of 34% next year.

Most silver-plan enrollees will be largely shielded from those increases, as government subsidies rise in tandem with premiums. In fact, a growing number of consumers will be able to obtain free health insurance next year because of those larger subsidies, according to an analysis conducted by the Wall Street Journal.

But those who don’t qualify for those tax credits will feel the brunt of the rate hikes, and may ultimately choose not to enroll.

Rates might also change before open enrollment depending on how states respond to the elimination of CSR funding, and if that happens, premium increases are likely to be even greater, according to Avalere. In 2017, premiums for the second-lowest-cost silver plans on Healthcare.gov increased 25%.

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