A new report from the Urban Institute seeks to characterize the rating regions across the United States by the number of insurers offering plans in the healthcare marketplaces and found stark disparities in demographics, coverage, and price.
A new report from the Urban Institute seeks to characterize the rating regions across the United States by the number of insurers offering plans in the healthcare marketplaces. The researchers found some stark disparities in demographics, coverage, and price among regions with varying levels of insurer participation.
As more insurers exit the individual marketplaces established by the Affordable Care Act (ACA), an increasing number of rating regions are left with just 1 or 2 insurers, resulting in reduced competition and higher premiums. The Urban Institute researchers explored the associations between the number of insurers in each rating region and the region’s population, benchmark premiums, geographical area, and plan and insurer type.
Of the 498 regions in the US, 146 have a single insurer selling plans on the marketplace, and these regions are home to 12.6% of the US population. In contrast, 69 regions have at least 5 insurers, and these regions account for 32% of the population.
There was a significant association between population and insurer options. The median population for the 1-insurer regions was 148,000, while the regions with 6 or more insurers had a median population of 1.1 million people. The researchers explained that market forces in the sparsely populated regions create a non-competitive market for potential insurers.
“Rating regions with 1 or 2 insurers tend to be thinly populated areas that are not attractive to insurers because they have too few potential covered lives,” the report states.
The researchers also observed trends in premium costs and yearly increases that were linked to the number of marketplace insurers in each region. Using benchmark premium rates for a 40-year-old nonsmoker, the median monthly premium was $451 in the regions with 1 insurer. Prices decreased as the number of insurers increased; the median premium was $270 in regions serviced by 6 or more insurers. Similar patterns were observed in the median changes in premiums from 2016 to 2017. Benchmark premium prices rose by 29.8% in the single-insurer regions, but by just 5% in the areas with at least 6 insurers.
Rating regions with just 1 marketplace insurer were mainly concentrated in the South; just over half of all regions in the US are in Southern states, but these regions made up 81.5% of the regions with a single insurer. The Northeast states had no regions with just 1 marketplace insurer. In contrast, nearly 60% of regions with 5 insurer choices were located in the West, and over 70% of regions with 6 or more insurers were in the Northeast or Midwest, which is disproportionate to their share of total rating regions.
Single-insurer regions were also significantly more likely to be located in states that allow the sale of “grandmothered” coverage policies not compliant with ACA requirements. Almost 95% of single-insurer regions were in “grandmothered” states, compared to just 54.1% of regions with 6 or more marketplace insurers.
According to the report authors, the “maintenance of grandmothered plans reduces the incentive for insurers to participate in the marketplaces because it allows insurers previously selling coverage in that state to stay out of the modified community-rated insurance pool and retain their healthier-than-average group of enrollees.”
The researchers concluded that the problem of single-insurer marketplace regions and the resulting lack of competition has no easy solutions. They recommended increasing outreach efforts to build enrollment in marketplace plans and providing additional financial assistance to make insurance more affordable, but acknowledged that these steps alone were not enough.
The political uncertainty surrounding the future of the ACA, including the continuation of cost-sharing subsidies, also makes it more difficult to predict insurers’ decisions to offer coverage through the marketplaces and thus the effects of competition on premium costs, according to the researchers.