There has been an erosion in the number of insurance companies participating in the Affordable Care Act health insurance marketplaces. As insurers have exited states’ exchanges in recent years, the number of insurers has fallen to just one in these five states: Alabama, Alaska, Oklahoma, South Carolina, and Wyoming, according to data from the Menlo Park, California-based Kaiser Family Foundation.
Insurers are pulling out of ACA exchanges for various reasons.
> 2017 insurers: 4 (tied-17th highest)
> Peak marketplace insurers: 8 (tied-14th highest)
> 2016-2017 premium increase: -2.6% (10th lowest)
> Uninsured rate: 9.6% (21st highest)
In the August 2016 issue of Health Affairs, Nicholas Bagley of the University of Michigan Law School and Mike Adelberg, a former Medicare and Medicaid official, said one of the problems facing insurers is the the size of the risk pool. In the individual and small-group markets, particularly on the exchanges, individuals insured under the ACA are sicker than originally expected.
The three ACA programs — reinsurance, risk corridors, and risk adjustment — that those who drafted Obamacare hoped would help keep premiums from rising unsustainably in the revamped markets have not performed as expected.
Uncertainty over whether the Trump administration will retain certain parts of the ACA has weighed on insurers. For example, Obamacare’s replacement may not help reduce medical costs that before the ACA placed a greater burden on low-income people.
Health insurance premiums on the ACA’s exchanges were expected to increase, largely because of the enrollment of previously excluded individuals with pre-existing conditions. Even faster increases were anticipated in 2017 because of insurers’ losses in this market and the phasing out of the ACA’s reinsurance program.
Of the 41 states where data is available, the average premium increased in all but Massachusetts and Indiana through 2016.
In 2014, there were an average of five insurers participating in each state’s ACA marketplace, according to Kaiser. There was an increase in insurer participation in 2015, with an average of six insurers per state. Insurer participation dipped in 2016 to 5.6 per state on average. The average number of insurers per state in 2017 is 4.3.
Insurer participation varies within states, and rural areas tend to have fewer insurers. On average, metropolitan-area counties have 2.5 insurers, compared with two in rural counties.
Of the 9.2 million consumers who have selected a marketplace plan, 2.5 million do so without any option, that is, there is only one insurer available.
To identify the states where Obamacare is disappearing, 24/7 Wall St. reviewed the number of marketplace insurers in every state for each year between 2014 — the first year the health care exchanges were fully operational — and 2017. The ranking is based on the share of insurers which have left the marketplace since the state’s peak number of insurers between 2014-2016. Data for this ranking came from the “Health Plan Choice and Premiums in the 2017 Health Insurance Marketplace” report by the Department of Health and Human Services.
The increase in premiums between 2016-2017 were based on the benchmark on which tax credits are calculated — the average monthly premiums for the second-lowest cost silver plans for a 27-year-old — in HealthCare.gov states and state-based marketplaces. Uninsured rates came from the U.S. Census Bureau’s 2015 American Consumer Survey.