ACA marketplace competition has dropped sharply in the Trump era

Donkey and elephant figurines face each other with stethoscope and pills with American flag in background
The decrease in insurer competition among ACA marketplaces corresponds with the change of administration in 2017. (Getty Images/Moussa81)

Competition in the Affordable Care Act (ACA) marketplaces has dropped sharply since the end of 2016, leaving people who buy coverage through those markets with fewer options and higher premiums.

That's the conclusion of a recent study in Health Affairs, which tracked the number of counties with sufficient competition (at least three insurers) in the years since the marketplaces were created in 2014. The authors found that while competition remained relatively stable in the first three years—reaching a high of 80% of counties in 2016—it has dropped sharply in the two years since.

In 2018, just 36% of counties had at least three insurers, although those counties accounted for 60% of the population. The researchers pointed to several policy decisions by the Trump administration that could have disincentivized insurer participation.

The study refutes a recent push by Trump administration officials to credit the president with bringing stability to the ACA. Policy experts have pointed out that stable premiums were largely due to higher increases last year thanks to regulatory uncertainty. 

"Policy changes during the administration of President Donald Trump—such as the cancellation of payments to insurers for cost-sharing reductions, temporary freezing of risk-adjustment payments, removal of the individual mandate, and the expansion of short-term insurance options—may also increase uncertainty and hasten insurer exits," the authors wrote.

This interactive graphic, prepared by Kaiser Family Foundation, shows how the makeup of competition changed among counties over the past five years.

Different regions experienced significant disparities in insurer participation following 2016. And the Health Affairs study found some statistically significant explanations for why some counties saw more competition than others.

Some were political. For instance, limited insurer participation (fewer than three insurers) was 30 percentage points more common in states with Republican-controlled or divided governments than in states with Democrat-controlled governments. Meanwhile, it was 30 percentage points less common in states with state-run marketplaces, compared to those with federally instituted marketplaces, and 26 percentage points less common in states that expanded Medicaid, compared with those that declined to.

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But even within states, researchers found explanations for deviations at the county level. Counties with particularly high mortality rates saw a 16-percentage-point increased likelihood of limited insurer participation per standard deviation. Counties with poorer residents also saw reduced participation, as did rural counties.

Meanwhile, counties where insurers had higher-than-average medical loss ratios or high per capita Medicare spending were more likely to have sufficient participation. 

Interestingly, counties with relatively large Hispanic and Latino populations also had a statistically significant reduced chance of limited insurer participation.

Researchers didn't offer any explanation for those factors, but a study published earlier this week indicated that immigrants usually receive less in healthcare expenditures than they pay in premiums.