How New Entrants Fare in the Insurance Exchanges

AJMC Staff

An analysis by McKinsey & Company of the competitive landscape of the public health insurance exchanges as it has so far unfolded has revealed that despite challenges to date, the exchanges have been attracting new entrants.
In the 2014 open enrollment period, one-fourth of the carriers offering plans were new entrants—meaning they had no individual insurance experience in states they were entering or no insurance experience at all. Just 4 new entrants did not re-file for 2015. Then in 2015, 28% of carriers were new to their state’s individual insurance market. Preliminary evidence suggests the 2016 open enrollment period will be similar to 2015.
Factors like lowered barriers to entry and the presence of the individual mandate and premium and cost-sharing subsidies likely increasing the number of covered lives have made the exchanges an attractive opportunity for new entrants, according to McKinsey.
However, the analysis points out that it is still too early to tell if the competitiveness of the new entrants will be sustainable.
“Overall, it is clear that the trend toward increased competition on exchanges is continuing,” according to the analysis. “Yet, it is too early to tell how new entrants will fare in the long run, as the market continues to be quite dynamic for all participants.”
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