Marketplace Participation Declining

With the passage of the Affordable Care Act (ACA), millions of Americans gained access to health insurance through the expansion of Medicaid eligibility and the implementation of health insurance Marketplaces. 

In the past two years, the Trump administration’s policy changes have destabilized the Marketplaces and reduced incentives for insurance providers to offer accessible plans to higher risk patients. The future of the ACA is now at-risk due to insurers leaving Marketplaces, thereby increasing premiums and driving lower participation of eligible populations.  

A recent paper dives into a cross-sectional county-based analysis to determine the factors behind limited competition (the presence of just one insurer in the county’s Marketplace) and the regions that are most likely to be affected.

The report found that the percentage of counties across the U.S. with limited competition increased sharply from 21.3% in 2016 to 64.4% in 2018. Furthermore, the percentage of counties with three or more Marketplace insurers dropped from 79% in 2016 to 36% in 2018. These data correspond to a decrease in the share of U.S. population with three or more Marketplace insurers from 92% to 60%.

The authors argue that the decreased participation of insurers in the Marketplaces may be concentrated in rural areas. Reviewing the data, however, the insurer participation seems to be delineated by state lines rather than county rural status. 

The report also offers statistically significant associations between counties that have 2 or fewer Marketplace insurers and mortality rate, middle age status, medical loss ratio, percent of Hispanic/Latino population, and Medicaid expansion status. 

For future studies looking at factors in ACA Marketplace insurer participation investigation into state-by-state differences in Marketplace implementation may shed some further insight into these relevant associations. 

Nevertheless, some main takeaways that policymakers should keep in mind include the following: (1) participation of insurers in ACA Marketplaces is trending downwards and (2) Trump administration policy changes will likely further destabilize ACA Marketplaces thereby reducing insurer participation in future years.

This Policy Prescriptions® review is written by Anveet Janwadkar as part of our collaboration with the Health Policy Journal Club at Baylor College of Medicine where he is a medical student.

Abstract

While the Affordable Care Act has expanded health insurance to millions of Americans through the expansion of eligibility for Medicaid and the health insurance Marketplaces, concerns about Marketplace stability persist-given increasing premiums and multiple insurers exiting selected markets. Yet there has been little investigation of what factors underlie this pattern. We assessed the county-level prevalence of limited insurer participation (defined as having two or fewer distinct participating insurers) in Marketplaces in the period 2014-18. Overall, in 2015 and 2016 rates of insurer participation were largely stable, and approximately 80 percent of counties (containing 93 percent of US residents) had at least three Marketplace insurers. However, these proportions declined sharply starting in 2017, falling to 36 percent of counties and 60 percent of the population in 2018. We also examined county-level factors associated with limited insurer competition and found that it occurred disproportionately in rural counties, those with higher mortality rates, and those where insurers had lower medical loss ratios (that is, potentially higher profit margins), as well as in states where Republicans controlled the executive and legislative branches of government. Decreased competition was less common in states with higher proportions of residents who were Hispanic or ages 45-64 and states that chose to expand Medicaid.

PMID: 30273031

Griffith, K, et al. Health Affairs. 2018; 37 (10): 1678-1684.