How insurers, regulators made the Affordable Care Act's 'bare county' problem disappear

While the debate over the Affordable Care Act raged on Capitol Hill, health insurers and state regulators quietly forged compromises that led carriers to cover all the “bare counties” on the law’s signature exchanges.

Now, new research (PDF) from the Urban Institute details how they did it.

The report examined six states that faced the prospect of having counties with no exchange insurer for 2018: Iowa, Nevada, Ohio, Oklahoma, Tennessee and Washington. It found that states pulled a variety of regulatory levers to coax insurer participation, including:

  • Clarifying the means for meeting regulatory standards on network adequacy.
  • Allowing flexibility in plan offerings and the review of premium rates.
  • Sharing data on claims history.
  • Allowing plans to assume no reimbursement for cost-sharing reduction payments in their rate filings.

In addition to these tactics, some states opted for unique strategies. Nevada, for example, offered an advantage in Medicaid managed care contract billing for insurers that promised to participate on the state’s ACA exchange—a move regulators believe encouraged Centene to cover its bare counties.

Strong, longstanding relationships between regulators and insurers were a key ingredient in these types of negotiations, the report noted. But ultimately, insurers’ participation decisions were driven by three primary factors: access to a provider network at reasonable cost, the risk pool within the relevant rating area and the insurer’s ability to price for that risk, and the actions of competing insurers.

RELATED: CareSource steps in to cover last U.S. county without any ACA exchange coverage option in 2018

Even among insurers that decided to fill bare markets, the policy uncertainty that’s driven many carriers to retreat from the exchanges persists, the report added. One insurer who responded said the company’s executives are “just terrified that the feds are going to pull the rug out from underneath them in the middle of the plan year.”

Insurers and state regulators interviewed by researchers also stressed that the actions taken to fill in bare counties are “temporary and unsustainable without long-term federal action.”

Indeed, even though there are no bare counties, about a fourth of the U.S. population lives in a county that will be served by just one on-exchange carrier in 2018.

Most respondents said funding CSR payments and enforcing the individual mandate would help steady the marketplaces. Some state officials saw state innovation as a promising stabilization tool—though they worried about barriers to getting those waivers approved.