Insurer competition dips on ACA exchanges

Health insurance, pen and stethoscope
About 26% of enrollees—living in 52% of counties—have access to just one ACA exchange insurer in 2018. (Getty/Minerva Studio)

Though no areas are lacking an Affordable Care Act exchange insurer for 2018, competition in the individual marketplaces has still declined.

On average, 3.5 insurance companies are participating in each state’s ACA marketplace in 2018, down from 4.3 in 2017, according to a new analysis from the Kaiser Family Foundation. That’s down from an average of 4.3 in 2017, 5.6 in 2016, 6.0 in 2015 and 5.0 in 2014.

Insurers’ decisions to exit or reduce their footprint in the individual market fueled the decrease in competition in both 2017 and 2018, the analysis said. The failure of several consumer-operated and oriented plans led to the slight dip in 2016, though that year also some new market entrants.

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On an individual level, about 26% of enrollees—living in 52% of counties—have access to just one insurer on the marketplace in 2018. That’s up from 21% of enrollees living in 33% of counties in 2017.

When only one insurer is available in any given area, it’s often offered by a Blue Cross Blue Shield or Anthem plan, the analysis noted. Anthem, however, has exited a little more than half of the rating areas where it participated in 2017.

The good news, per the analysis, is that almost half, 48% of enrollees have a choice of three or more insurers in 2018. But that, too, is a decline from 2017, when 58% of enrollees had three or more carriers to choose from, and an even bigger dip compared to 2016, when it was 85%.

The lower competition on the exchanges in 2018 is likely one of the factors that has led premiums to climb—particularly in areas where a carrier is the only option available. Uncertainty over federal reimbursement for cost-sharing reduction payments, and the future of the ACA in general, also played a role in the increased rates.

In addition to pushing premiums higher, policy uncertainty factored heavily into insurers’ decisions about whether to participate in certain areas at all. In some cases, state regulators coaxed insurers to stick it out or to cover areas where others exited, but they stressed that those actions are “temporary and unsustainable without long-term federal action.”