The Potential Impact of Additional Carrier Exits on the Individual Market

This year has seen a significant reduction in the number of carriers and plans in the individual market. Losses experienced by many carriers led to a significant amount of market exit. A recent proposed rule advances some of the solutions proposed by industry related to special enrollment periods and third party purchases. Yet at the same time, there are a variety of more fundamental changes being considered by policymakers, most recently the March 6 draft of the American Health Care Act. It is not clear whether these proposed reforms will increase the attractiveness of the market to carriers, and there will likely be a period of several years before any reforms take effect. The potential for the weakening of the individual mandate during this transitional period is an important concern for carriers. 

It is in this highly unsettled context that Humana recently announced its plans to exit the individual market for 2018. Shortly thereafter, the CEO of Aetna announced that the market was in a “death spiral” and Molina reported some significant fourth quarter losses in its individual market business and expressed uncertainty about future participation.

While Humana’s footprint in the 11 states where they currently participate is relatively small, there are notable potential consequences for marketplace enrollees in certain markets, particularly in 16 counties in Tennessee, where currently there are no other carriers participating. While no other carrier has announced plans to exit in 2018, the potential consequences of additional exits would almost certainly be consequential.

The Table figures estimate the county-level impact of potential exits by the eight most significant multi-state carriers. In addition to Humana, estimates are presented for Aetna, Anthem, Cigna, UnitedHealth Group, Molina, Centene, as well as Highmark, a major Blue plan with individual market business in three states. All estimates take the Humana exit as a given, but assume that no other carrier exits or enters. Estimates are for marketplace plans and customers only.

The Table shows the counties affected by these potential exits by the number of carriers that would remain in the market. The population affected in these counties represents the estimated total marketplace enrollment for 2017, not enrollment for a particular carrier. The Table shows the estimated marketplace enrollees in counties that would have zero or one carrier in the event of an exit.

Anthem is the most significant marketplace participant. With plans in 14 states, an Anthem exit would leave nearly 300 counties and about a quarter of a million marketplace enrollees with no carrier, mostly in Georgia, Missouri, and Kentucky. An additional half million consumers residing in 227 other counties would find themselves with only one carrier. 

In terms of the number of people affected, a Cigna exit would be the second most consequential. Roughly 400,000 enrollees would be left with one or no carrier were Cigna to exit.

Centene and Molina, two Medicaid carriers frequently hailed as successful in the marketplace, are more likely to be in counties with at least two other carriers. Molina, in particular, has relatively little presence in counties where their exit would leave zero or one carrier. Centene has a little more than 100 counties containing about 250,000 consumers where their absence would result in less choice. Most of these counties are in Mississippi, Georgia, and Texas.

UnitedHealth Group has largely exited the individual market, and its remaining small presence is concentrated in markets with quite a few other carriers. This is also largely true of Aetna, although there are nearly 200,000 consumers that would be left with one carrier were they to exit. Although Highmark is only in three states, like most Blues, they are very important in their markets. In the majority of counties where Highmark participates, they are either the only carrier or one of two carriers.

There are an estimated 11 or 12 million marketplace enrollees in 2017. Despite the current uncertainty, these consumers, along with the 7 or 8 million off-exchange enrollees, will continue to rely on the individual market for their health insurance, since they lack other options. The individual market depends on the voluntary participation of carriers, and many of the potential exits described here would have significant implications for marketplace consumers.