In states searching for ways to solidify their individual exchanges, policymakers are frequently encountering a tale of two markets: urban versus rural, subsidized versus unsubsidized and competitive versus monopolized.
That dichotomy was the recurring theme at a panel on Friday hosted by the USC-Brookings Schaeffer Initiative for Health Policy where experts discussed the variety of ways states have tried to stabilize Affordable Care Act exchanges despite a barrage of new challenges at the federal level.
Louise Norris, a healthcare writer from Colorado, described her state’s approach as “hands-on, proactive,” and “long-term.” It did not permit transitional plans, and it now prohibits residents from stringing short-term plans together in lieu of comprehensive coverage.
Still, problems remain. In certain rural regions where the cost of living is higher, residents earn more money, leaving them ineligible for premium tax credits—a phenomenon known as the “subsidy cliff.” One state proposal would raise the limit to 500% of the federal poverty level (FPL). Another would make the state one rating area, but a study found urban residents wouldn’t approve.
Minnesota attempted to address the subsidy cliff, explained Lynn Blewett Ph.D., a professor at the University of Minnesota and director of the State Health Access Data Assistance Center. Using dollars from the state’s general fund, it offered a 25% rebate for consumers above 400% FPL. But the policy unfolded at the last minute, so takeup was limited, and it was a one-time offering for that plan year.
A rural-urban divide also exists in Arizona, according to Mark Hall, a nonresident senior fellow at the Brookings Institute's Center for Health Policy. In 2013, several insurers offered plans throughout the state, but since 2017, there have been only two—one covering the two major metropolitan areas of Phoenix and Tucson, and the other, everywhere else.
However, startup insurers Oscar and Bright Health are expected to enter the market in Arizona for 2019.
The number of insurers in Iowa is expected to double as well. While only Medica offered plans this past year, Wellmark has said it will reenter this year, said Brad Wright, an associate professor at for the department of health management and policy at the University of Iowa.
A recent analysis has shown more carriers will be entering the individual market in 2019 than exiting, offer hope for some stability. But the panel offered a sobering reminder that state exchanges are still fragile.
The individual market is “still on thin ice,” Hall said. “It wouldn’t take much to disrupt it.”