Why Don't More Medicaid Insurers Sell Plans in ACA Marketplaces?

Two co-workers talk while at work.

Increase in managed care providers in ACA marketplaces show potential to lower premiums.

The Issue

The number of insurers participating in the Affordable Care Act’s (ACA) individual insurance marketplaces has generally decreased over time. This trend of fewer insurers often leads to higher premiums for enrollees. In addition, marketplace insurance rating regions where at least one Medicaid insurer sells coverage tend to have lower premiums. The authors analyze the possibility of convincing more Medicaid insurers to participate in the marketplaces and the impact that would have on lowering marketplace premiums. The findings come from interviews with Medicaid managed care organization leaders and help explain why some potential participants in Medicaid managed care have been reluctant to offer coverage on ACA marketplaces.

Key Findings

  • Among the 10 states with the lowest average benchmark premiums, all have Medicaid managed care organizations (MMCOs) broadly offering marketplace coverage.

  • Some insurers view the Medicaid program as more attractive than the ACA marketplaces because Medicaid offers plans more policy stability, clearer delineation of rules, and less burdensome regulation.

Conclusion

The authors’ findings help explain why a Medicaid insurer may not want to sell plans in the ACA marketplaces yet may favor the idea of a Medicaid buy-in program (one that allows residents to pay premiums to “buy in” to Medicaid). Although the consumers who end up enrolled in Medicaid buy-in coverage might be the same as someone who would otherwise sign up for marketplace coverage, the organizational requirements that would apply to offerors of these two types of plans could end up being very different. If a Medicaid buy-in program used Medicaid’s less stringent requirements, it could prompt organizations not currently offering marketplace plans to offer new coverage options to consumers.

About the Urban Institute

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