- When insurance companies left the Affordable Care Act marketplace between 2015 and 2018, their existing enrollees were more likely to leave the ACA than consumers whose insurers continued to sell policies on the exchange, a new study in Health Affairs suggests.
- And the impact of an insurer's decision to exit the ACA marketplace was twice as large for consumers who did not qualify for federal subsidies that cap premium payments based on income as it was for consumers who did receive subsidies.
- The study also found that premium increases were larger in geographic areas where the number of insurers competing on the ACA marketplace dwindled, compared with areas of robust competition. Not surprisingly, consumers living in areas with less competition among insurers — and higher premiums — were more likely to leave the marketplace than their peers in areas with competitive marketplaces, the study found.
The online ACA marketplaces, which debuted in 2014, were envisioned by policymakers as places where consumers could buy affordable insurance policies. This year, 39 states are using the federal government's online ACA marketplace, while the other states and Washington, D.C. operate their own version.
The study in Health Affairs focuses on participation in the federal government's exchange, Healthcare.gov, where competition among insurers declined in 2017 and 2018 to the point where 29% of returning shoppers in 2018 had to choose a health plan from one insurer, the study's authors wrote. Premiums also increased substantially during that two-year period.
The study analyzed data on 13.3 million consumers eligible to re-enroll in a plan offered on the ACA marketplace from 2015 to 2018.
Other reports have studied which consumers buy insurance plans sold on the ACA marketplaces.
Between 2016 and 2018, there was a 2.5-million drop (or 24% decline) in unsubsidized consumers buying plans on the ACA, according to a report from CMS released earlier this year. During the same period, enrollment among people receiving subsidies increased 4%.
The authors of the Health Affairs study highlighted the impact of marketplace competition on the rate of premium increases, and presumably the affordability of these plans for unsubsidized consumers.
In 2017, for example, unsubsidized consumers who lived in areas where competition on the federal ACA marketplace was limited to one or two insurers faced an average premium increase of $136 per month for the lowest-cost silver plan. But unsubsidized consumers who lived in geographic areas with three or more insurers saw their average premium for the same types of plans increase by an average of $56 per month, the study found.
Consumers eligible for subsidies had the opposite experience. In areas that became less competitive, the average amount that they would pay in premiums decreased by $7 per month in 2017 and $13 per month in 2018. But their peers in competitive markets saw their premiums increase by $1 per month in 2017 and decrease $3 per month in 2018.
This phenomenon happens because insurers that remain in the marketplace set what is known as the benchmark premium, which then determines the amount of federal subsidies, the authors note.
"In this study we found that continued insurer participation could be one method to help maintain both stable Marketplaces and competition to limit premium increases," they concluded.