More Than 1/3 Of U.S. Will Have No Health Exchange Plan Competition In 2017

BY JOURNAL STAFF

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Experts from Avalere, a Washington, D.C. based health-care consulting firm, predict that more than one-third of the country will have no health-insurance exchange plan competition in 2017, leaving consumers with few options for coverage.

A new analysis from Avalere finds that nearly 36 percent of Affordable Care Act (ACA) exchange-market-rating regions may have only one participating insurance carrier offering plans for the 2017 plan year. And, some sub-region counties may have no plans available. (Note: A new Kaiser Family Foundation study found a similar result, noting that 31 percent of U.S. counties likely would be served by just one ACA marketplace insurer in 2017.)

Nearly 55 percent of exchange-marketrating regions may have two or fewer health insurers, according to Avalere. To determine competition levels in the exchanges, the firm said it compared carriers that offered plans in 2016 to those that have publicly announced they will scale back participation or exit the exchanges in 2017 (e.g., Aetna, Humana, United, some co-ops). While this analysis assumes no new plans enter the market, consumer choice could improve if carriers decide to expand exchange participation, the firm said.

Rating regions are the geographic areas used to set insurance premiums. In some cases, zip codes or counties are split between rating regions. Consumers may only buy plans offered within the rating region in which they reside.

"Depending on where consumers live, their choice of insurance plans may decrease for 2017," Elizabeth Carpenter, senior VP at Avalere, said in a news release. "Some exchange enrollees may need to choose another insurance plan in order to maintain coverage."

In 2016, according to Avalere, only 4 percent of rating regions had only one or fewer participating health insurers, while 33 percent had two or fewer carriers participating. Ahead of the 2017 plan year, several large national and regional healthinsurance issuers have indicated they will significantly scale back or no longer participate in the ACA exchange market because of unsustainable financial losses.

"Lower-than-expected enrollment, a high-cost population, and troubled risk mitigation programs have led to decreased plan participation for 2017," Dan Mendelson, president of Avalere, said in the release. "Congress and the Administration can choose to stabilize these markets and reestablish competition - but only through a consensus process that brings in a broader swath of the uninsured."

Avalere's analysis indicates that seven states (Alaska, Alabama, Kansas, North Carolina, Oklahoma South Carolina, and Wyoming will have just one health-insurance carrier per rating region in each rating region in the state in 2017. That is not a problem we face here yet New York State will have more than two insurance carriers participating in all of its eight rating regions, according to Avalere.

How can low levels of competition in the exchanges be alleviated?

Avalere experts say national and/or state policy fixes could:

* Improve market stability through enhanced risk-mitigation programs, including changes to the risk-adjustment-transfer formula and permanent reinsurance.

* Change current enrollment rules to minimize the problem of adverse selection (only sicker consumers buying insurance), including tighter special enrollment period standards, lock-out periods for consumers who delay enrollment, reforms to the 90day grace period for individuals receiving exchange subsidies, and incentives to encourage enrollees to maintain continuous coverage.

* Encourage more individuals to enroll in coverage to grow the risk pool to include more healthy consumers, including additional funding for outreach, enhanced or reformed subsidies, or stronger mandate standards.

* Introduce new insurance products or market rules to make exchanges more attractive to younger, healthier individuals, including changes to the age rating provisions, new and/or lower-cost plan options, or expanded eligibility for other public programs (i.e. Medicare or Medicaid).

Avalere's analysis is based on recent public announcements related to insurance-carrier participation. Insurance-company participation may change prior to open enrollment on Nov. 1.