Increased competition continues on public health insurance exchanges

Many new entrants have jumped into the individual health insurance market under the Affordable Care Act, encouraged by the opening of federal and state marketplaces, the individual mandate and premium subsidies, according to a report by McKinsey & Company.

After accounting for the entrances and exits of both new companies and those already in the market, 333 insurance carriers competed on the 2015 health insurance exchanges, according to a report put together by the consulting firm. Those numbers included many new carriers, with some 28 percent new to their state's individual insurance market, according to the report.

The 2016 open enrollment period for the exhanges will be much like the 2015 market based on preliminary evidence from 41 states, the report concludes. "Overall, it is clear that the trend toward increased competition on exchanges is continuing. Yet, it is too early to tell how new entrants will fare in the long run, as the market continues to be quite dynamic for all participants," it states.

Based on data available as of Sept. 14, 2015, only three of the new entrants from prior years indicated they intend to withdraw from the exchanges in 2016, the report said. Others are expanding into new markets. Fourteen carriers new to individual insurance in a given state have announced they will offer exchange plans in 2016.

As the market will take years to play out, it's too early to tell which insurance carriers will prove to be winners or losers on the public exchanges, the report notes. But it is clear that both new entrants and established insurance carriers have faced challenges.

Pittsburgh-based insurer Highmark, faced with financial losses, recently decided to offer more narrow-network plans on the exchanges. And Highmark's struggle was not unique. For example, Blue Cross Blue Shield of North Carolina stopped offering its broadest network plans in three of the state's most populous cities because of the $123 million operating loss it faced in its first year of ACA business. Blue Cross Blue Shield of New Mexico opted to pull out of the state's exchange entirely when the state insurance commissioner denied its rate hike request of more than 50 percent.

To learn more:
- read the report