Study: ACA market competition on the upswing, but regional variation persists

Although the ACA exchanges show signs of rebounding after 2017’s political turmoil sent some insurers scurrying, marketplaces with little competition are still common, according to a new report. 

The Urban Institute analyzed the state of competition in the Affordable Care Act exchanges in the 2017 plan year and found that 146 out of 498 nationwide rating regions had just one insurer available. Marketplaces with little competition are especially common in the South.

By contrast, that number reached 202 in 2018, following a turbulent 2017 that saw multiple attempts to repeal the ACA. Some insurers crept back into the exchanges for 2019, according to the report, when there were 165 regions with just one available payer, but the trend is still worrying, the researchers said. 

“There was a lot of uncertainty in these markets that was introduced in the course of 2017, and we’re still feeling the effects of that,” Linda Blumberg, Ph.D., an institute fellow and one of the report’s authors, told FierceHealthcare. “We’re seeing a little bit of an improvement, but we certainly have farther to go to get back to where we were.” 

RELATED: How insurers, regulators made the Affordable Care Act’s ‘bare county’ problem disappear 

Regions with just one or two insurers participating in the exchanges are especially concentrated in the South, according to the report. For the 2019 plan year, more than half (52.9%) of people lived in a region with low-competition markets. 

The Northeast, by contrast, has the most robust insurance markets, according to the study. There were no rating regions with just one insurer, and 40.7% of the population lives in an area where five or more insurers participate in the exchanges. 

Blumberg said that these trends have been a concern since the exchanges were launched in 2014, but they worsened going into 2018 and 2019. 

In addition, Blues plans dominate exchanges with few options, according to the study. In 146 of the 165 markets with just one participating payer, that payer was a Blue Cross Blue Shield insurer. 

RELATED: Final enrollment numbers show drop due to cancellations 

Blumberg said the study flags an ongoing issue that policymakers should watch: market competition is linked strongly to regional population. Less-populous areas can’t support markets with many participating insurers, she said. 

“There just aren’t enough covered lives in those areas to support large numbers of insurers, and that is not going to change,” she said. 

That link should inform solutions aimed at lowering premiums and healthcare costs. It also underpins discussions of alternatives, such as a public option or capped payment rates, for people who don’t qualify for the ACA’s subsidies and thus face the highest costs.