Marketplace Pulse: The Medicaid Map May Shape Marketplace Entry

The Marketplace Pulse series provides expert insights on timely policy topics related to the health insurance marketplaces. The series, authored by RWJF Senior Policy Adviser Katherine Hempstead, analyzes changes in the individual market; shifting carrier trends; nationwide insurance data; and more to help states, researchers, and policymakers better understand the pulse of the marketplace.

Millions of people are losing their jobs, and will also lose their employer sponsored health insurance coverage.

A recent study by the Urban Institute projected that 25 to 43 million workers and their families may lose their employer sponsored coverage. Many will avail themselves of the safety net created by the ACA—Medicaid (especially in the majority of states that expanded) and the individual market. Enrollment in Medicaid and marketplace plans is projected to grow by as much as 20 and 10 million, respectively, due to fallout from the employer market. Recent data suggests that Medicaid enrollment has already increased by nearly three percent. At the same time, there will be some migration between these two segments, as some current individual market enrollees may lose enough income to qualify for Medicaid. The exact outcome depends on both eligibility for coverage as well as take-up, and other factors like the potential subsidization of COBRA. The coverage impact will vary, with those states that did not expand Medicaid ending up with greater numbers of uninsured residents.

Given the expected rise in Medicaid and marketplace enrollment as well as increased churn, continuity between Medicaid and the marketplace is more important than ever. In a recent Health Affairs blog, we analyzed overlap plans, which we define as plans from a common parent carrier that offer both marketplace and Medicaid (other than long-term services and supports) in the same county. Overlap plans are currently quite common. Almost 60 percent of counties have at least one parent carrier offering plans in both the individual market and Medicaid. This tendency increases in urban areas, with the result that 80 percent of the population under 65 years lives in a county with overlap. In large metro areas, 85 percent of counties have overlap plans, compared with 52 percent of counties classified as non-metro. In expansion states, where the continuity between Medicaid and the marketplace is most important, overlap is more common. Two-thirds of counties in expansion states have at least one overlap offering, as compared with only half of counties in states that did not expand Medicaid. The analysis also showed that premiums are significantly lower in counties with overlap plans.

Competitive conditions in overlap counties vary considerably. Counties with overlap plans are more likely than others to have more than one carrier (Figure 1), but this is not always the case. In nearly one in five counties with an overlap plan, the overlapping carrier has a monopoly. In another roughly 20 percent of counties with overlap, there are only overlapping carriers in the market. About one-third (35%) of the 1,858 counties with overlap plans have more than one. In some urban counties, there are more than two. Not surprisingly, Manhattan (New York County) has the largest number—there are 6 parent carriers offering both marketplace plans and Medicaid (Centene, Anthem, Healthfirst, Emblem, MetroPlus, and United).


Figure 1

Of the 2,740 parent/county instances of overlap on the individual market, slightly more than half are from national carriers. Provider Sponsored Health Plans, such as Kaiser, offer 21 percent, and not-for-profit Blues plans offer 17 percent. But large national carriers lead the list of the parent companies with overlap plans in the most counties.

It is easy to see why overlap plans are important to enrollees and policymakers, from the standpoint of continuity of care as well as affordability. Given the near certain migration of enrollees from the employer segment to the marketplace and Medicaid, it is likely that insurer interest in these segments will increase as well, and links to Medicaid may shape the pattern of future marketplace participation.

During their First Quarter earnings call, United Health Group responded to a question about marketplace entry, by saying that they will choose states based on "the efficiency of their networks, ability to compete, and desire to expand Medicaid." Shortly thereafter, United filed to enter the individual markets in Washington and Maryland, where they currently participate in Medicaid. As can be seen in this interactive tool, there are approximately a dozen other states where United currently participates in Medicaid, but not the marketplace. There are similar possibilities for Anthem and Centene. On the other hand, companies with little Medicaid presence may find it hard to be competitive in new ACA markets.

Over time, the links between Medicaid and marketplace participation have grown, with increased marketplace participation of Medicaid MCOs, a high prevalence of overlap, and an association between overlap and affordability at the county level. These trends suggest that Medicaid participation may facilitate entry and improve the ability to be competitive in the marketplace. As the importance of both segments grows, their geographies may be increasingly intertwined, and Medicaid participation may shape the contours of entry in an increasingly competitive individual market.