Dive Brief:
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Affordable Care Act marketplace payers have found stability, but a new report found there are still geographic areas with little competition.
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In its report, the Urban Institute said marketplaces in larger population areas are thriving with payer competition, but "a large and increasing number of marketplaces are falling short." Of the nearly 500 regions studied, 271 had two or fewer payers offering plans and 69 had five or more.
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People in areas that aren't highly competitive usually pay higher premiums. In 2019, the medium benchmark for the second-lowest price silver plan for a 40-year-old non-smoker in areas with one payer cost $592 per month, while in regions with five or more ACA payers the cost is $376 per month, the group found.
Dive Insight:
The lack of competition, especially in low population regions like rural areas, show there are still issues with the exchanges.
Middle-class Americans who don't qualify for ACA tax credits and subsidies are facing higher premiums in areas with little payer competition. The Urban Institute estimated that 20% of the U.S. population lives in an area with at least five ACA plan payers. The Northeast had more than 40% of its population in highly-competitive areas. On the other end is the South, where only 4% of areas had heavy competition. More than half of the people who live in the South are in regions with limited competition.
Blue Cross Blue Shield-affiliated plans dominate the ACA marketplace with limited or zero competitors. The Urban Institute said 146 of the 165 markets with only one payer had a Blue Cross Blue Shield plan as the sole option.
Meanwhile, payers with extensive Medicaid managed care plans, such as Molina Healthcare and Centene, are the biggest payers in 14 markets. Medicaid payers have found success in the ACA marketplaces partly because participants often have lower incomes, similar to the Medicaid members they already serve. On the flip side, payers with more experience in the employer-sponsored market, such as UnitedHealthcare and Aetna, have pulled back on ACA plans.
At the moment, there's nothing in the system to lure more payers to those areas. To spur competition, the Urban Institute suggested creating a public insurance plan and capping provider payment rates that private ACA plans pay to slightly more than Medicare levels.
"Capping the provider payment rates for all insurers in the ACA-compliant nongroup markets would allow more insurers to compete and address monopoly provider pricing problems. A new public insurance plan paying the same provider rates would have a similar effect on federal spending and household affordability but would involve creating and maintaining a new governmental entity, and it would face stronger insurer opposition," the group argued.
That solution would not be accepted by providers, who are already struggling with sagging reimbursements and uncompensated care. The American Hospital Association and Federation of American Hospitals recently spoke out against a public option, saying it would lead to lost revenue. They estimated a public option would cost hospitals $800 billion and said it would hurt the employer-sponsored market, which is how most Americans get their health insurance.
Despite that opposition, Americans support a public option, according to a recent Kaiser Family Foundation poll that found nearly three-quarters of Americans approve of such a proposal.