Marketplace Pulse: Marketplace Shifts as National Carriers Withdraw

Change in County-Level Participation by User Type

A season of tumultuous changes was capped off by the recent announcement that the Administration would immediately suspend payments to carriers for cost sharing reductions (CSRs). This announcement gave rise to a hurried set of re-filings so that all states could “load” the CSR costs onto the silver premiums. There is no way to protect against the loss of CSR payments in 2017, which carriers will have to endure in the short run. While there is still the potential for exit, as of this writing it appears that there will be at least one insurer serving every county in marketplaces established through the Affordable Care Act (ACA).

But it has certainly been a tough season. The percentage of counties with only one carrier increased notably, from about one-third in 2017 to close to one-half for 2018. About one-fourth of the population lives in a county that will be served by one carrier. Most market-watchers know that exits exceeded entries, by a large factor. Approximately 1,500 county level marketplace exits were announced in advance of the 2018 plan year, as compared with only about 200 entries. Yet at the same time it could be argued that progress toward a stable and healthy equilibrium is currently quite tentative.   

Measuring Winners and Losers

State Participation: Most States Saw at Least Some Change

One useful way to measure participation is to look at the net change in the number of carriers at the state level. Another is to think about what is happening inside states, in terms of the net number of county-level entries and exits. By combining the two, we can provide a useful scale to roughly assess how much change took place. 

By this measure, for 2018, about 40 percent of states will have as much or more carrier participation as they did in 2017. More specifically:

  • Two states actually gained a carrier (New Jersey and Alabama)
  • 18 states reported no change
  • 20 states had a moderate reduction in carrier participation
  • 11 states had a major change

Painting With a Broad Brush

Yet this measure paints with a broad brush. For example, Wisconsin lost three carriers this year, but still has more than any other state except New York. By the same token, some states that reported no change in fact had no carriers to spare, having bottomed out in prior years. While many well-performing markets, such as Washington, D.C., New Mexico, and Connecticut, saw continued participation from all of their carriers, other states with similar characteristics lost carriers, for example Maryland, Massachusetts, and New Hampshire.

Marketplace Shifts as National Carriers Withdraw

Local players—Blues, regional carriers, and provider–sponsored plans—now dominate the individual market. The national commercial segment has almost completely exited the individual market, and now has the smallest participation at the county level.

While participation did not increase in any carrier segment, it declined the least among the Medicaid Managed Care Organizations (MMCO). Centene clearly eclipsed all others with more than 100 entries into new counties for 2018, accounting for about half of all county-level market entries. Yet despite the attention given to this expansion, the MMCO category currently comprises less than 20 percent of the market as measured by county filings.

New Jersey (Oscar) and Alabama (Bright Health) both gained carriers that are relatively new to the industry. New Jersey and Alabama don't have much in common, but both have not-for-profit statewide Blues plans that are highly unlikely to desert their individual markets, and both states have already seen entry and exit in previous years. While most commercial carriers appear to have moved on, these entries suggest at least a modicum of interest remains in the individual market. Many will be watching to see whether this signals the beginning of a new wave of market competition or the shaggy end of an exodus. 

Where We’re Headed

The prospects for these new players reflect tensions for the market as a whole. Clearly the massive number of net exits signals a retrenchment by many market participants in 2018, resulting in shrinking of territorial footprints and outright withdrawal by large parts of the industry. For a variety of reasons, including attempts to repeal the ACA, the potential of the individual market has not yet been fully realized. Yet, it still remains the source of coverage for millions of people. Many believe that with the right policy environment, the innate demand and societal need exist for a thriving and much larger individual insurance market. And were this to take place, reversals in these recent carrier participation patterns may well occur. The resilience of the market to repeated challenges gives some credence to this thought and some hope for the future.

Underlying data drawn from HIX Compare, a project of the Robert Wood Johnson Foundation.