Next year, there will be an average of 4.5 insurers per state on the Affordable Care Act’s (ACA's) exchanges, a slight increase from the 2019 coverage year, a new analysis finds.
While the figures released Thursday by the nonprofit Kaiser Family Foundation are a sign of progress on the exchanges, they remain far below the peak of six insurers per state in 2016. But the 4.5 insurers per state is slightly above four insurers in 2019 and 3.5 in 2018 when the exchanges were wracked by massive premium hikes and insurers pulling out of the exchanges.
"For the insurers entering new states and expanding service areas in 2020, that is driven by the fact that they see there is profit to be made in the ACA exchanges," said Rachel Fehr, a research assistant with Kaiser’s ACA program.
Open enrollment for ACA coverage started on Nov. 1 and runs through Dec. 15.
The share of ACA marketplace enrollees with only one insurer to choose from in 2020 will be 10%, the lowest level since 2016 when only 2% of enrollees had one option, Kaiser added. However, there remains a disparity in insurer availability in rural areas and in certain states.
“The number of insurers per state ranges from one company each in Delaware and Wyoming to more than ten companies in California, New York and Wisconsin,” Kaiser said in a release.
Participation also varies greatly within states that have several insurers as rural parts of states tend to have fewer participants.
“On average, metro-area counties have 2.6 insurers participating in 2020 (up from 2.3 in 2019), compared to 2.0 insurers in non-metro counties (up from 1.8 in 2019)," Kaiser said.
It also remains unclear whether insurers will continue to return to the exchanges for 2021 and beyond.
“The main thing we will want to keep an eye on is how profitable insurers are going to be in the coming year,” said Fehr. “That will give us a sense of whether insurers will enter.”
Over the past two years, insurers on the individual market that houses the ACA’s exchanges have been making record profits, Fehr said.
The exchanges have largely stabilized since 2018, when insurers sought to raise premiums or exit the exchanges after suffering major losses in 2017 and 2016. Premiums for the average benchmark plan on the exchanges will be down 4% in 2020 compared to the 2019 coverage year, according to the Centers for Medicare & Medicaid Services.
The insurer financial performance in early 2019 suggests that the exchanges are generally profitable despite the repeal of the ACA's individual mandate and the expansion of short-term insurance plans that are cheaper than ACA plans, Kaiser said.
A larger question mark is the future of the ACA itself.
The entire healthcare industry is still waiting to hear a decision by three federal appellate judges on a lawsuit that seeks to invalidate the entire law. A decision on the case is expected any day now and could significantly impact the marketplaces.
“If there are no other major policy changes or uncertainty, I think it isn’t unreasonable to expect that market could be stable,” Fehr said.