The competition decline followed a warning by the Blue Cross Blue Shield Association (BCBSA) that the ACA marketplaces are not working.


Sept. 20—The share of government-run insurance marketplaces projected to have just one insurer jumped to nearly 50 percent nationwide, according to the Centers for Medicare & Medicaid Services (CMS).

The number of counties expected to lack insurer competition was 1,524—a sharp rise from CMS projections in June, when the agency estimated the total at 1,200, or less than 40 percent. If the latest projection holds, it would be a huge increase from 2017, when 33 percent of counties had access to just one insurer in the marketplace, according to a Kaiser Family Foundation (KFF) report.

The lack of insurer competition was expected to affect 2.7 million enrollees, according to CMS figures—up from roughly 2.4 million in the June projections.

An agency map indicated that most of the counties without competition will be in the South, Midwest, or mountain states.

The projections are based on “known issuer public announcements” through Sept. 20, according to CMS. The agency also noted that “participation is expected to fluctuate and does not represent actual Exchange application submissions.”

The sharp drop in insurer competition followed a recent scramble to find at least one insurer for counties that were expected to lack any plans in 2018.

The finding may surprise some given that KFF issued a study examining medical-loss ratios in the first quarter of 2017 and concluded that "individual market insurers on average are on a path toward regaining profitability in 2017."

The announcement of the participation decline came a day after the Blue Cross Blue Shield Association (BCBSA) issued a written statement raising “serious concerns” about a Republican bill to replace the Affordable Care Act (ACA), while also expressing concerns about the existing ACA marketplaces.

“The current market is not working, and we will continue to work with lawmakers on a bipartisan basis to improve the individual insurance marketplace with the goal of making coverage more affordable and accessible for all,” BCBSA stated.

KFF noted that Blue Cross and Blue Shield or Anthem plans are usually the ones available when only one insurer participates in an ACA marketplace.

In June, CMS released data showing that 141 insurers had applied to participate in the marketplaces in 2018, compared with 227 at the same time in 2017.

The drop did not bode well for restraining steep premium hikes in the ACA marketplaces. A September analysis by Avalere found that for counties with only one ACA insurer in 2017, average premiums were 9.6 percent higher than in counties with two participating insurers and 15.3 percent higher than in counties with three or more participating insurers.

“While many factors contribute to premiums—including local medical costs, health needs of enrollees, and market uncertainty—lower competition in 2018 may contribute to higher premiums in some parts of the country,” said Caroline Pearson, senior vice president at Avalere.

That’s bad news for the ACA marketplaces, where insurers’ average requested premium increases ranged from 16.22 percent if cost-sharing reduction (CSR) payments were provided and the individual mandate was enforced, to 29.81 percent if that support was lacking, according to tracking by ACA supporter acasignups.org. Those increases followed an average rate hike of 25 percent for ACA plans in 2017.

Off-Exchange Impact

It was unclear how robust the competition remains in the private individual-insurance market, where 7 million enrollees obtain coverage. One ACA marketplace insurer, Health Alliance Plan (HAP), said in a Sept. 15 announcement that it was leaving the government-run marketplaces but will continue to sell off-exchange plans.

HAP blamed the ACA marketplace departure on factors that included “uncertainties related to premium stabilization programs, enforcement of the individual mandate and not knowing whether the federal government will continue to fund cost-sharing reductions.”

A month-long bipartisan attempt to appropriate CSR funding and a reinsurance program was dropped this week after Democrats and Republicans couldn’t agree on how much flexibility on ACA coverage requirements to give states as part of the package.

“If you’re talking about appropriating money for the CSR subsidies and/or some sort of reinsurance, what you are really talking about is stabilizing the subsidy system—you’re not talking about stabilizing the market because the market is the non-subsidized part,” Ed Haislmaier, a healthcare policy adviser at the right-leaning Heritage Foundation, said in an interview.

BCBSA said it supports “providing states with greater flexibility in shaping health care options for their residents.”

Mandate Enforcement

HAP is among a number of insurers and ACA advocates that have warned that a lack of enforcement by the Trump administration of the law’s individual mandate is undermining the marketplaces. However, other policy experts have said the requirement was never effective or well-enforced by the Obama administration.

“It’s never been enforced very well,” said Joel White, president of the Council for Affordable Health Coverage, a coalition of health insurers and other businesses.

Brian Webb, assistant director for health policy for the National Association of Insurance. Commissioners, made a similar point in an interview.

White also cited the $7.6 billion in tax penalties, according to IRS figures, paid by a cumulative 21 million individuals in 2014, 2015, and 2016 for not having qualifying insurance as a demonstration of a “cost-benefit choice” by consumers. Additionally, a cumulative 37.1 million people claimed exemptions from the mandate.

“That’s why we have advocated in the past to not just look at sticks but look at carrots,” White said. Such carrots could include loyalty discounts for people who retain insurance coverage or wellness discounts, which are prohibited in the individual market.

Republicans also were drawn away from a bipartisan effort at stabilizing the markets by a push to pass a last-minute overhaul of the ACA before Sept. 30, the end of FY17.

White said Congress may return to a marketplace stabilization package after September if the ACA-overhaul effort fails and a “crisis” occurs in the markets.

“We won’t see what the crisis looks like until after this month,” White said in an interview.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, September 20, 2017