Counties in which no insurer has yet entered the health insurance marketplace for 2018, or so called “bare counties,” are irresistibly interesting because they potentially represent the failure of a market to deliver a minimum of services to consumers. They also provide a kind of referendum on the ability of local markets to withstand structural weakness, state policy decisions, and the current climate of federal uncertainty.
At the time of this writing, approximately 40 counties in three states—Indiana, Ohio and Nevada—have no committed insurer to sell exchange plans in 2018. This number will fluctuate as the season progresses. It may grow as insurers announce further exits, which could happen up until September. It may shrink as state regulators cajole carriers to cover bare areas, which has already happened in a number of states. There has also been a small amount of bona fide expansion.
While bare counties are interesting nationally, they are unacceptable for states, and regulators do everything they can to fill them. The most likely outcome is that bare counties will be covered by the time open enrollment begins.
The focus on bare counties may cause some to lose sight of the overall trend in insurer participation. There is no question that the distribution of insurers is shifting for 2018, but perhaps not as much as many might think.
Currently about one-third of U.S. counties nationwide have one insurer. Based on preliminary data, and assuming bare counties are filled, in 2018 that will be true for about 45 percent of counties.
While about 30 percent of counties have three or more insurers now, that is projected to be true for about 22 percent of counties in 2018.
From the standpoint of population, the change is less dramatic. Right now approximately 19 percent of the U.S. population lives in a county with one exchange insurer, and for 2018 this is forecast to be about 23 percent.
At the high end, about 58 percent of people currently live in counties with three or more exchange insurers, and this is projected to drop to about 52 percent next year.
But regardless of what one might think about the magnitude of that shift, there is an interesting aspect to the nature of the change. In 2018, the role of national commercial insurers in the individual market will be truly negligible. Of the more than 700 county-level exits announced thus far this year, more than 65 percent came from national commercial carriers. Humana and Aetna have completely exited the exchanges, and United is virtually gone. Cigna will likely remain in a small number of states. Anthem, while functioning as a blue plan, has also significantly pruned its participation in a number of states. At this writing national commercial insurers (excluding Anthem) comprise less than 2 percent of county offerings. This continues but sharply accelerates a trend which began in earnest in 2015. Even that high point marked a notable decline from 2013.
It appears that thus far the post-ACA individual marketplace has not been a good business opportunity for this group of insurers. Although some have maintained token footholds in various states—suggesting that they would like to be ready were conditions to improve—their role in the individual marketplace will be minimal in 2018. Due to their importance in the industry writ large, these companies are still considered important stakeholders in current policy debate, despite the fact that they are really not market participants in any meaningful sense.
Meanwhile, over the last few years, the participation of provider sponsored plans, regional plans, Medicaid managed care organizations—and most importantly the blues—has steadily increased, and they are the dominant issuers in the market right now. These companies are far more likely to be locally based, which generally raises the threshold for exit, and thereby requires a greater commitment. It seems that for some this commitment has paid off, since financial performance for many has improved in 2017.
Both friends and foes of the ACA will continue to monitor insurer participation in the months ahead, and the future is far from certain. However, the data thus far suggest that in most counties there will be at least two insurers offering plans on the exchange, and the majority of the population will be able to choose from at least three.