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ACA Insurer Markets Rebound Slightly, but Not to 2017 Levels, Urban Institute Report Finds

Allison Inserro
A report from the Urban Institute examined changes in Affordable Care Act (ACA) marketplace rating regions from 2017 to 2019.
A report from the Urban Institute examined changes in marketplace insurers since 2017, given the changes in Affordable Care Act (ACA) regulations that have taken place over the last 2 years, as well as the impact on premiums. The authors noted that marketplace premiums tend to be substantially higher in rating regions with 1 insurer, compared with more competitive areas, and called the trend “concerning.”

The report is an update of a 2017 analysis examining the characteristics of ACA marketplace rating regions with 1 or 2 participating insurers.

The number of markets with only 1 or 2 insurers increased by 19% in 51 rating regions between 2017 and 2019. But when looking at years separately, there was a large jump of 28% in 2018, followed by a 7% drop in 2019.

The number of rating regions with 5 or more insurers also fell by over 40% between 2017 and 2019, but the bulk of the change occurred between 2017 and 2018. The number of competitive rating regions increased in 2019.

In 2019, about 38% of the population lives in rating regions with either 1 or 2 marketplace insurers. With more than one-third of the population now living in rating regions with few marketplace insurers, lack of competition is increasing both federal spending (because of higher benchmark premiums and associated tax credits) and household spending for enrollees ineligible for premium tax credits.

This year, the median marketplace benchmark premium for a 40-year-old in rating regions with 1 insurer is $592 per month, 36% higher than the $376 per month premium in rating regions with 5 or more insurers. Differences in median benchmark premiums between noncompetitive and highly competitive markets have also increased.

Increasing the number of insurers participating in marketplaces in these noncompetitive rating regions is challenging because of their small populations. In addition, it is difficult for new insurers to negotiate favorable provider payment rates when they do not already have market share in an area.

By contrast, more than 20% of the US population lives in an area with 5 or more marketplace insurers.

The report suggests several pathways for improvement, but they also include the very same mechanisms that the Trump administration has reversed from the previous administration, such as trying to increase enrollment through better outreach efforts, improving financial assistance, and making it easier to obtain marketplace subsidies. In addition, those measures, while helpful, would not be entirely sufficient, the report said.

Last year, the administration slashed the marketing budget for outreach and also started to encourage plans that are not compliant with the ACA.

In 2017, 271 out of 498 rating regions had either 1 or 2 marketplace insurers, and 69 had 5 or more insurers. 

The authors observed significant regional variations:
  • The Northeast leads the nation in marketplace insurer competition, with a little more than 40% of its population living in areas with 5 or more marketplace insurers.
  • In the South, only 4% of residents live in areas with 5 or more marketplace insurers; most—just under 53%—live in areas with only 1 or 2 marketplace insurers.
  • A little more than 25% of the population in both the West and the Midwest live in areas with 5 or more insurers; 19% and 40%, respectively, live in areas with only 1 or 2 insurers.
The report was funded by The Robert Wood Johnson Foundation.

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